Luxembourg Collective Investment Vehicles : Legal Regime And Features In A Nutshell

TYPES OF COLLECTIVE INVESTMENT VEHICLES AVAILABLE IN LUXEMBOURG UCITS

stands for Undertakingsfor Collective Investment in Transferable Securities and designates those investment funds which have been set up in compliance with the provisions of the amended Luxembourg Law of 17 December 2010 implementing EU Directive 2009/65/EC ("UCI Law"). UCITS benefit from a European passport in that, once authorised by the supervisory authority in Luxembourg, they can, using a standardised notification procedure, be sold to the public in all other EU Member States. UCITS also benefit from facilities for registration with authorities in numerous non-EU Member States which recognise the UCITS label and the investor protection regime it entails. In order to protect the retail investors to which UCITS can be marketed, UCITS are subject to specific rules as regards the assets in which they can invest and the diversification and concentration rules with which they have to comply. These aim at ensuring an appropriate liquidity of the UCITS investment portfolio allowing investors to redeem their units at least twice a month.

PART II FUND

refers to collective investment undertakings governed by Part II of the UCI Law, which do not qualify as UCITS either because of their investment policy or because of the rules applicable to the distribution of their units/shares. Although Part II Funds can be sold to the public, they do not have access to the UCITS passport. They will, however, benefit from the AIFMD passport1 under certain conditions. They are subject to the ongoing supervision of the Luxembourg supervisory authority ("CSSF"). Yet, they have increased flexibility as regards the type of assets they can invest in, the investment strategies they can employ, the diversification rules they are subject to and the liquidity they offer to investors.

SIF

stands for Specialised Investment Funds organised under the amended Luxembourg Law of 13 February 2007 ("SIF Law"). SIFs are reserved for so-called well-informed investors, i.e. in substance institutional investors, professional investors and investors subscribing for a minimum of EUR 125,000. They are subject to ongoing supervision by the CSSF. Because of the sophistication of their investors, they benefit from a pretty flexible regime. Among others things, SIFs have to invest in accordance with the principles of risk-spreading but otherwise have full flexibility as regards the type of assets in which they invest and...