UCITS III Funds: One Size Does Not Fit All Denis Beaudoin, CEO, and Christophe Olivier, CIO
UCITS III appears as the gold standard, strict enough to give investors comfort and flexible enough to accommodate a large number of traditional and alternative strategies. However, in the UCITS market, one size does not fit all. The UCITS framework is heterogeneous – shoehorning strategies is a threatening practice and therefore, the label does not exempt investors from performing thorough due diligence.
UCITS III: The Gold Standard
The first UCITS Directive was adopted in 1985 with the aim of integrating the EU market for investment funds by offering both greater investment opportunities to investors and greater business opportunities to the asset management industry. Proposals to amend the original directive were adopted in December 2001 and are generally referred to as UCITS III. One of the main amendments to the original framework is the broadening of eligible assets to financial derivative instruments not just for hedging purposes. These amendments opened the way to manage different absolute performance strategies within the UCITS III framework. These new absolute return UCITS III funds are sometimes referred to as Newcits.