MAKING THE MOST OF UCITS IV

Master-feeder structures UCITS IV

LEGAL TEXTS: DIRECTIVE 2009/65/EC (UCITS IV), CHAPTER VIII, ARTICLES 58 TO 67 - DIRECTIVE 2010/42/EU

Directive 2009/65/EC (UCITS IV) establishes a harmonised European framework that allows the assets of coordinated feeder UCITS from different Member States to be pooled in a coordinated master UCITS; Furthermore, feeder UCITS may or may not be domiciled in the Member State of the master UCITS. This structure is designed to strengthen the competitiveness of the European asset management industry by: • Generating substantial economies of scale; • Increasing the average size of the master UCITS to be managed; • Rationalising the product offering within the European Economic Area; • Enabling UCITS to be marketed on a more flexible basis by means of feeder funds. Objective of the measure and benefits A “feeder” UCITS is an undertaking that permanently invests at least 85% of its assets in units or shares of a single “master” UCITS (or sub-fund of another UCITS) and in derivative instruments whose sole purpose is hedging. A “master” UCITS is a UCITS, or a sub-fund thereof, which has among its share/ unitholders at least one feeder UCITS, is not itself a feeder UCITS and does not invest in a feeder UCITS. Time limit and procedure The investment by a feeder UCITS in a master UCITS is subject to the approval of the feeder UCITS’s competent authority , such authority having a time limit of 15 working days in which to grant (or withhold) its approval. It should be noted that no acceptance is required for the master UCITS. The feeder UCITS must provide the following documents to the competent au- thority in its own Member State: The fund rules, prospectus and key investment Key features

Management Companies will therefore be able to take advantage of new op- portunities to market their products on a more flexible basis across the EU thanks to the establishment in different Member States of feeder funds based on a master fund existing in another Member State.

Master DOMICILEA

Feeder 1 DOMICILE B

Feeder 2 DOMICILE C

Feeder 3 DOMICILE D

Feeder 4 DOMICILE E

Feeder 5 DOMICILE F

information documents of the feeder UCITS and master UCITS, the agreement between the feeder UCITS and master UCITS or internal conduct of business rules, the agreement between the custodians (if different), the agreement between the auditors (if different) and a certificate stating that the master UCITS fulfils the requirements of the Directive. Agreements Prior to investing in the units or shares of a master UCITS, the feeder UCITS must conclude an agreement with the latter enabling it to fulfil the requirements of Di- rective 2009/65/EC. However, if the master UCITS and feeder UCITS are managed by the same Management Company, where applicable via its different European subsidiaries, this agreement may be replaced by internal conduct of business rules that ensure compliance with the requirements specified in the agreement. In addition, respective agreements must be drawn up between the custodians, on the one hand, and the auditors, if different, on the other.

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