Regulated Funds/ UCITS
Why exactly are UCITS Funds so popular? What makes them different?
In everyday usage, UCITS are Regulated Investment Mutual Funds based in the European Union. Due to the intense regulatory process to have a fund approved as UCITS compliant by a regulator, the UCITS label serves as a stamp of quality and reliability for investors.
UCITS are the most regulated collective investment vehicle in the EU. Naturally as a result, funds are perceived as safe and well-regulated investments and are popular in Europe and Asia among investors who prefer not to invest in a single public limited company; but rather among diversified unit trusts spread out within the European Union, with capital protection, legal protection and liquidity a key requirement.
The Undertakings for the Collective Investment in Transferable Securities (UCITS) is a regulatory framework of the European Commission that creates a harmonized regime throughout Europe for the management and sale of mutual funds.
The UCITS rules and product-based regulation include requirements around allowable investments, liquidity, disclosure, and investor protection, as well as the technical and practical organisation of such funds. Given the detailed and specific nature of the UCITS rules, these funds are suitable for broad spectrum distribution to both small, retail and institutional investors.
Due to strict regulatory and investor protection requirements, they account for around 75% of all collective investments by small investors in Europe.