Hedge Fund News London: Europe’s very own travelling fund structure is explored here. Mr. Aymeric Lechartier, Business Development manager at the consultancy firm Carne, provided Opalesque with expert commentaries.

What is a UCITS III?
UCITS (Undertakings for Collective Investment in Transferable Securities), are investment funds established and authorised in conformity with the requirements of Directive 85/611/EEC.

The two main attributes of UCITS III funds are:

(1) Once a fund is approved as UCITS III by a European regulator (Ireland and Luxembourg being the main domiciles), the fund then obtains a European Union passport which allows the marketer to distribute the fund in various European jurisdictions, after registration. These funds can also be distributed outside the European Union, such as Asia or LatAm – except for the U.S. - depending on each jurisdiction.

“Passporting is a quicker and easier procedure,” said Aymeric Lechartier. “This is why European managers opt for the UCITS III alternative for cross boarder distribution.”

(2) UCITS III funds can invest in a greater variety of financial instruments, thus allowing mutual funds to extend their reach and expand their returns. UCITS III status can be applied to 130/30s funds and some hedge funds too.

“Before UCITS III there were a whole lot of alternative strategies you were not able to conduct in a UCITS,” Mr. Lechartier noted. “Since the use of leverage and derivatives is allowed, alternative managers are more open to the UCITS III structure...

Source:
UCITS III the European travelling funds - part 1 – Alternative managers show interest as highest level of regulation


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