Concern over rumoured Ucits reclassification

Author: Gemma Varriale | Published: 20 Jul 2011

As the Ucits V review draws closer, some market participants are concerned that proposals to distinguish between complex and non-complex Ucits (undertakings for collective investment) could lead to too many funds being excluded from the retail market.

Freddie Brausch, a Luxembourg-based partner with Linklaters conceded that the EC is giving serious thought to introducing this classification. However, he said that questions remain over where to draw the line when distinguishing between complex and non-complex funds.

Some lawyers believe that many funds will be treated as complex and so will not benefit from the lighter touch regulatory approach. The effect would be to limit the way they can be sold to retail investors.

Rating agency fuels speculation

Standard and Poor’s (S&P) recently fuelled this speculation that the EC is going to reduce the investment scope of Ucits funds.