UCITS

The UCITS framework, currently based on Directive 2009/65/EC as amended, sets harmonized rules for funds authorized in one EU member state — most often Luxembourg or Ireland — so they can be marketed across the EU after a notification. UCITS must offer liquidity to investors at least twice a month (most deal daily), invest mainly in liquid transferable securities and other eligible assets, and follow diversification rules such as the 5/10/40 rule (generally no more than 10% in one issuer, and holdings above 5% together no more than 40% of assets).

Derivative use is permitted within limits on global exposure, measured by the commitment approach or value-at-risk. Every UCITS needs an independent depositary with safekeeping and oversight duties, and a UCITS management company or self-managed investment company. Retail investors receive a PRIIPs Key Information Document, which replaced the UCITS KIID from 1 January 2023.

Operationally, UCITS require daily or frequent NAV production, investment-restriction monitoring, liquidity risk management, and detailed regulatory reporting. Some alternative strategies are run as “alternative UCITS” to reach retail and institutional investors who cannot buy unregulated funds.