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The Advantages of Choosing a UCITS Fund Structure

UCITS (Undertakings for the Collective Investment of Transferable Securities) has gained tremendous popularity since the fund structure was first introduced in 1985. Today, UCITS account for approximately $9 trillion in assets under management globally. Institutional investors see UCITS as a safe and well-regulated investment option. UCITS requirements are stringent in terms of portfolio composition, use of leverage, use of short sales and transparency. These investor friendly mandates make UCITS funds a logical investment choice for both institutional and retail investors.

Generally, UCITS funds are domiciled in either Luxembourg or Ireland with these two jurisdictions accounting for approximately $5 trillion of the assets in UCITS funds. Historically, investment managers have either chosen to establish a UCITS fund structure on their own or work with a UCITS fund platform provider.

U.S. managers have increasingly utilized third-party UCITS platforms with the primary drivers of the decision being cost and regulatory oversight. The main advantages of utilizing a UCITS platform are:

  • Speed to Market – Using an established platform will facilitate a much faster launch as the UCITS structure has already been approved and launching a new sub-fund on a platform is a relatively cost efficient and simple process.
  • Cost Savings – Many of the fixed overhead costs of a platform are allocated to each of the underlying sub-funds therefore lowering costs to the investor. In addition, most UCITS platforms are able to negotiate lower costs with service providers due to operational efficiencies.
  • Regulatory Compliance Oversight – Given the increased regulatory scrutiny and reporting responsibilities enforced by regulators, having a third party handle these requirements removes a significant burden for investment managers. The board of a UCITS platform takes primary responsibility for the majority of the ongoing compliance, corporate governance and risk management processes allowing an investment manager to focus on managing the portfolio.

Carolon Capital’s Ireland domiciled UCITS platform has the advantages noted above while differentiating itself in a few important ways.

  • Carolon has an established network of institutional investor relationships and offers dedicated distribution efforts for each of its sub-funds. While most platforms include marketing and distribution as part of their service offerings, very few actually add value to their investment managers in this area. For Carolon, it is the core differentiator of our product.
  • Carolon’s interests are fully aligned with the investment managers through its unique revenue sharing arrangement. If our managers don’t succeed, we don’t succeed.
  • Carolon’s platform is transparent: there are no onboarding fees, no termination fees and we don’t “mark-up” third party costs.

We believe these differentiators truly set Carolon’s UCITS platform apart in an increasingly crowded and commoditized marketplace.