Not to be confused with AIFs

Compare and contrast alternative investment funds which are regulated under AIFMD, which are professionals-only funds (hedge funds etc). The regulations are in some ways converging, but there are still a lot of qualitative differences in the types of risks that an AIF can take compared to a UCITS.

See: Depositary comparison under AIFMD and UCITS


UCITS - or "undertakings for the collective investment in transferable securities" - are regulated European investment funds, generally aimed at retail investors.

UCITS funds must meet strict criteria as to how they are set up, managed and marketed, and as to the portfolio of asset a UCITS fund is allowed to invest in: There are concentration limits and other criteria which ensure diversity of risk; assets must be liquid, there should be very limited use of leverage and the fund must ensure it has diverse exposure to trading counterparties, banks and so on.

The most recent UCITS update is UCITS V, (2014/91/EU (EUR Lex)), which has specific implications for Custodians and depositaries, and was driven in part by the fallout from Madoff. But the bulk of UCITS IV, set out at 2009/65/EC (EUR Lex), is still in force.

===UCITS IV=== UCITS IV is the common name for 2009/65/EC (EUR Lex) passed by the European Parliament and of the Council of 13 July 2009. It was subsequently amended by...

===UCITS V=== On 23 July 2014 the European Union adopted 2014/91/EU (EUR Lex) on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions.

This directive introduces new rules on UCITS depositaries, such as the entities eligible to assume this role, their tasks, delegation arrangements and the depositaries’ liability as well as general remuneration principles that apply to fund managers.

The depositary as a specific function under UCITS legislation (rather as it does under AIFMD). The depositary may delegate its functions to a third party custodian - as to which see sub-custodian.

See Also