Futures, options, forex margin trading, stock and bonds, ETFs…people study it in order to profit themselves. But not everyone have a lot of time to spend on trading and then people try to find an investment fund for middle or long term investments.

There is a large number of types of investment funds. Conservative and aggressive ones, hedge-funds. Mutual and close-end funds…and so on. So many names and so limited information…Where to put your money? And here comes one more abbreviation – UCITS or Undertakings for Collective Investment in Transferable Securities’. What is this? Let’s find out (Luckily I participated in international 2 week programme referring EU fund industry).

What are UCITS investment funds?

Even those investors who know how to choose a fund basin on its performance and portfolio risk often get mixed up with such factors as liquidity, confidence, taxes and so on.

I am not going to spend your time for investment fund classification. We will need a separate article for it. Here I am going to concentrate on UCITS.

UCITS (Undertakings for Collective Investment in Transferable Securities’) – open-end investment funds, which fulfils all requirements mentioned in European Commission Directive 85/611/EEC (published in 1985 but updated) and 2009/65/EC (the new edition published in 2009).

What does this mean? UCITS is an investment fund (open-end type) which is registered in EU, EEA or any other highly regulated market. The difference between just an investment fund and UCITS is that UCITS provides full information for investors, the information is transparent and your money are safer (against frauds). Fund can obtain the status of UCITS providing needed information to regulators. UCITS status provides several bonuses to investment fund management companies and investors:

• for example, it provides a passport which gives company the right to sell fund units all around EU and the fund management don’t have to obtain any allowance from local regulators it has to inform that fund units are going to be sold on exchange in the country. Less bureaucracy, that’s awesome!
• in order to obtain a status, the investment company fulfils several strict rules: adequate risk-management by limits on maximum investments into a single body (concentration risk), limitation of leverage, information standards and etc. As a result, investor can be more sure in the fund and feel safer.