Undertakings for Collective Investments in Transferable Securities (UCITS)
Undertakings for Collective Investments in Transferable Securities are the most common form of public funds.1These are open-ended investment funds that are subject to EU Directive 2009/65/EC and defined by EU-wide standards. UCITS may only invest in statutory defined types of funds. Correspondingly, UCITS are subject to the Luxembourg Law of 17th December 2010 relating to undertakings for collective investment.
- Regulatory oversight by authorities in Luxembourg
- Funds for private and institutional investors
- Investments in funds that are traded on official stock exchanges in regulated markets
- Mandatory risk diversification
- European passport
- Opportunity for umbrella structure with sub-funds
- Released from income tax
- Annual subscription duty ("taxe d'abonnement") of 0.05% NAV
- Legal entity: FCP or SICAV (SA)
In Luxembourg, UCITS may be created as one of two legal entities:
- As a FCP (comparable to German special assets)
- As an open-ended investment company (variable capital)
Fonds Commun de Placement (FCP)
FCPs are contractual constructs between a fund manager and an investor without a separate legal personality. Therefore, FCPs must be administered by investment companies. The investment company acts in its own name and represents investors to third parties, billing the costs incurred to the FCP. FCPs provide opportunities for umbrella structures with several sub-funds.
Investment company (SICAV)
A SICAV (Société d‘Investissement à Capital Variable) is an open-ended collective fund with variable share capital. It is an alternative to the FCP, under company law. In contrast to FCPs, SICAVs have separate legal personalities. Theoretically, an administrative board is held accountable towards third parties and is tasked with management. In reality, most of the management functions supposedly held by the board are often delegated to a management company. Similar to FCPs, SICAVs provide opportunities for umbrella structures with several sub-funds.