EUROPE: UCITS Schemes Investing in other collective investment schemes

Wednesday February 22 2006

UCITS III, with its more flexible investment powers, paves the way for UCITS to make wider ude of investment into various asset classes including derivatives, money market instruments and collective investment schemes. In this article we focus on collective investment schemes as an eligible asset class and the challenges which Managers of UCITS schemes face in making investment into these products.

In particular, we make the argument that the current UK regulations respecting the ability of UCITS to invest into other collective investment schemes are unduly restrictive and unnecessarily preclude investment by UK authorised UCITS into an array of US and other non-EEA domiciled Exchange Traded Funds (ETFs) and also into funds which have the power to invest in gold or immovables. We believe that the UK regulations place UK UCITS ar a disadvantage when compared to UCITS authorised in other jurisdictions.