Investing in funds

How UCITS funds protect investors

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One of the cornerstones of the European Union’s UCITS (Undertaking in Collective Investments in Transferable Securities) directives governing investment funds suitable for sale to the general public is the concept of investor protection.

Built up by a series of laws that have come into effect between 1988 and July 2011, the UCITS regime aims to provide individuals with a secure environment for fund investing. It sets out universal rules on how these funds should be structured, managed and governed, and how their assets should be safeguarded.

The current UCITS rules were introduced in Luxembourg through the law of December 17, 2010, supplemented by circulars and guidance from the country’s financial industry regulator, the Commission de Surveillance du Secteur Financier (Financial Sector Supervisory Authority, or CSSF for short).

Funds that meet these criteria can be sold freely to the public in any EU country, provided that they meet the standard UCITS notification requirements. Arguably the UCITS standards of investor protection are the most important factor in their development over two decades into a trusted brand not just in Europe but worldwide. Therefore it’s worth taking a closer look at various important aspects of investor protection contained in the UCITS framework:

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Eligible assets

Diversification

Liquidity

Valuation

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Risk management
and compliance

Oversight and
safekeeping

Fund
information

Unit linked pension products
What is an investment fund?
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