Undertakings For The Collective Investment Of Transferable Securities (UCITS)

What is the ‘Undertakings For The Collective Investment Of Transferable Securities – UCITS’

The Undertakings for the Collective Investment of 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. UCITS funds can be registered in Europe and sold to investors worldwide using unified regulatory and investor protection requirements. UCITS fund providers who meet the standards are exempt from national regulation in individual European countries.

Explaining ‘Undertakings For The Collective Investment Of Transferable Securities – UCITS’

In everyday usage, a UCITS is a mutual fund based in the European Union. UCITS funds are perceived as safe and well-regulated investments and are popular in Europe, South America 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.

History of UCITS

The first UCITS Directive was adopted on Dec. 20, 1985, with a stated aim of facilitating cross-border offerings of investment funds to retail investors. In the early 1990s, proposals for modifications to the directive were made but never fully adopted. As such, there is no UCITS II. However, in 2002, following discussions among member countries, two new Directives were adopted. Directives 2001/107/EC and 2001/108/EC, together known as UCITS III, broadened the investment spectrum of UCITS funds and relaxed some restrictions for index funds.

Examples of UCITS Funds

Because they are seen as very safe and well-regulated, UCITS funds are very popular investments. According to the European Commission, they account for around 75% of all collective investments by small investors in Europe. Many mutual fund providers use an expression such as “UCITS-compliant” as part of their marketing strategy. While the funds are regulated in Europe, buyers from all over the world can invest in UCITS funds.

Further Reading

  • Undertakings for the Collective Investment in Transferable Securities Directive V: Increased Protection for Investors – heinonline.org [PDF]