MAKING THE MOST OF UCITS IV

Client profile & objectives

Indeed, UCITS funds enjoy numerous benefits. They gather all the gua- rantees that investors search for and are easy to sell worldwide: • They provide security (compliance requirements in terms of invest- ment limits and concentration risks, reporting to regulators, manda- tory depositary, strong risk management processes, etc.) and transpa- rency for all types of investors; • They provide liquidity in terms of ability to redeem shares/units of funds; • They are an internationally recognised brand exported well beyond Europe, in Asia and Latin America; • Their distribution is very well organised. If a proper distribution channel is established, combined with a strong brand and the right investment strategies, the added value of your UCITS range will be better liquidity, risk management, regulatory over- sight, transparency, reporting, better access to retail investors, institu- tional investors and private banks.

You are an EU Management Company running regulated hedge funds or funds of hedge funds. You are consequently already approved by your re- ference supervisory authority.You may have limited share capital and wish to keep your costs variable. As such, you are keen to outsource whatever you can and run your business with tight resources. Your investors are “qualified” or institutional investors. You have built your own distribution capabilities dedicated to your products. Despite the fact that your funds are non-UCITS and not open to retail investors, some of them could be transposed into a UCITS framework as the UCITS III Directive has expanded the range of authorised financial instruments. Indeed, most of hedge fund strategies can be replicated by UCITS with a few instruments (credit default swap, total return swap, equity swaps, repo). You have no experience in UCITS structures yet but a number of drivers encourage you to enter the UCITS market: • The lessons of the 2008 financial crisis; • The increasing investors’ need for transparency, liquidity and protection; • The global business development perspectives. Objectives Driven mainly by business development motivation, you want to mirror or transpose your existing regulated alternative products into UCITS funds.

Possible scenarios

Whatever the scenario chosen, you will distribute your UCITS on a cross-border basis through the notification procedure.

To reach your objectives, you might consider the following scenarios:

Possible scenarios

Conversion of your existing non-UCITS funds into UCITS funds (i.e. Newcits)

Scenario 1

Creation of a UCITS range in a cross-border distribution centre (e.g. Luxembourg or Ireland) to replace your domestic non-UCITS range

Scenario 2

Creation of a UCITS range in a cross-border distribution centre (e.g. Luxembourg or Ireland) in addition to your domestic non-UCITS range

Scenario 3

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