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Preface To AIFMD Marketing Passport
The Alternative Investment Fund Managers Directive (AIFMD) is a law enforced by the European Union on the financial regulation of private equity, hedge, and estate funds. The European Union marketplace is of vital importance for its vast investment fund industry, asset management practices, and excellent service provided to institutional and retail customers.
AIFMD marketing passport is a special directive, which makes provision for a single marketplace within the European Union for the marketing of AIFs largely known as the ‘marketing passport’. The AIFMD marketing passport directives are applicable to managers based outside EU as well. This directive makes provision for AIFMs to market their AIF’s freely across the European Economic Area (EEA) without registering under the NPPRs regime in each country.
What is UCITS?
Undertakings for Collective Investment in Transferable Securities (UCITS) are essentially an initiation by the European harmonized fund product. This fund product can be effectively sold on a cross-border basis within the EEA. The UCITS funds are extensively sold to retail and institutional investors. UCITS largely provide a risk management framework based on their predefined rules of risk diversification, safekeeping of assets, regulation of the service providers, and governance. The UCITS funds are largely sold outside EU in Switzerland, Asia, South America, and South Africa as well.
Advantages of UCITS Funds
The UCITS fund distribution structure has garnered immense popularity since its inception in 1985. The main advantage of working with UCITS fund is as follows-
Speed to Market – Utilising an established platform helps in the faster launch, as the UCITS structure is pre-approved. This, in turn, makes launching a new sub-fund on a platform a relatively cost-effective and simple process.
Cost Savings – Majority of the fixed overhead costs of a platform are distributed to each of the underlying sub-funds, this essentially lowers costs to the investor. In addition, most UCITS passport platforms negotiate to lower costs with the service providers on account of the operational competences.
Regulatory Compliance Oversight – The party plays a pivotal role in bearing the responsibility of managing the regulatory scrutiny and reporting responsibilities enforced by the regulators. This by large reduces significant burden of work on the investment managers part. The investment manager dedicates attention towards portfolio management, and the board of the UCITS platform takes charge of the ongoing compliance, corporate governance and risk management processes.
Institutional investors look upon UCITS as a trusted and well-regulated investment option. The UCITS requirement is stricter in terms of use of leverage, transparency, portfolio composition, and use of short sales. This investor friendly directive makes UCITS fund distribution a logical investment option for both the institutional and retail investors.
AIFMD marketing passport is a special directive, which makes provision for a single marketplace within the European Union for the marketing of AIFs largely known as the ‘marketing passport’. The AIFMD marketing passport directives are applicable to managers based outside EU as well. This directive makes provision for AIFMs to market their AIF’s freely across the European Economic Area (EEA) without registering under the NPPRs regime in each country.
What is UCITS?
Undertakings for Collective Investment in Transferable Securities (UCITS) are essentially an initiation by the European harmonized fund product. This fund product can be effectively sold on a cross-border basis within the EEA. The UCITS funds are extensively sold to retail and institutional investors. UCITS largely provide a risk management framework based on their predefined rules of risk diversification, safekeeping of assets, regulation of the service providers, and governance. The UCITS funds are largely sold outside EU in Switzerland, Asia, South America, and South Africa as well.
Advantages of UCITS Funds
The UCITS fund distribution structure has garnered immense popularity since its inception in 1985. The main advantage of working with UCITS fund is as follows-
Speed to Market – Utilising an established platform helps in the faster launch, as the UCITS structure is pre-approved. This, in turn, makes launching a new sub-fund on a platform a relatively cost-effective and simple process.
Cost Savings – Majority of the fixed overhead costs of a platform are distributed to each of the underlying sub-funds, this essentially lowers costs to the investor. In addition, most UCITS passport platforms negotiate to lower costs with the service providers on account of the operational competences.
Regulatory Compliance Oversight – The party plays a pivotal role in bearing the responsibility of managing the regulatory scrutiny and reporting responsibilities enforced by the regulators. This by large reduces significant burden of work on the investment managers part. The investment manager dedicates attention towards portfolio management, and the board of the UCITS platform takes charge of the ongoing compliance, corporate governance and risk management processes.
Institutional investors look upon UCITS as a trusted and well-regulated investment option. The UCITS requirement is stricter in terms of use of leverage, transparency, portfolio composition, and use of short sales. This investor friendly directive makes UCITS fund distribution a logical investment option for both the institutional and retail investors.