Undertakings Collective Investment in Transferable Securities (UCITS)
Candlefocus EditorThe UCITS framework was developed in 1985 by the European Commission and has become a popular choice of investment fund across Europe. The UCITS framework seeks to ensure the protection of investors and applies to all UCITS collective investment schemes. UCITS funds must
• Comply with all relevant EU regulations • Be subject to strict transparency rules • Be independently managed and overseen by qualified personnel • Be invested in liquid transferable securities
UCITS funds are widely seen as safe, well-regulated and diversified investments. The UCITS structure enables investors to access professional fund management services in a cost-effective way. As such, this has become an attractive option for retail investors, as a means of diversifying their portfolios across Europe without incurring too much risk.
UCITS funds are also easy to buy and sell and have no restrictions on distributions. This allows investors to have more flexibility when it comes to their investments. The UCITS framework also stipulates that funds must be priced and traded in a uniform manner across the European Union.
However, there are some downsides to investing in UCITS funds. For example, the UCITS structure does not allow investments in unlisted securities or derivatives. That said, the UCITS framework does have some measure of flexibility, allowing funds to invest in fewer liquid securities in order to generate higher returns.
Overall, the UCITS framework provides an accessible and well-regulated investment option for retail investors looking to invest in European funds. With a UCITS fund, investors can benefit from professional fund management, greater liquidity and a diversified portfolio, all while benefitting from strong investor protection under the UCITS framework.