Permitted Investments

A UCITS can invest in a diverse range of liquid investments such as transferable securities, bank deposits, money market instruments, financial derivatives and units of other funds either as a fund of funds or a feeder fund. A UCITS cannot invest in real estate nor can it invest directly in commodities, although it may be able to gain exposure to commodities indirectly using derivatives.

Investment Restrictions

A UCITS is subject to the following investment restrictions:

1. a UCITS may invest no more than 10% of its net assets in unlisted securities;
2. a UCITS is precluded from investing more than 10% of its assets in any one issuer. Where the UCITS invests more than 5% of its assets in any issuer the maximum amount of such holdings in excess of 5% is limited to 40% of the net asset value of the UCITS;
3. a UCITS may invest up to 35% of its net assets in any one security issued by a government or public international body;
4. a UCITS may invest up to 100% of its assets in transferable securities and money market instruments issued or guaranteed by an EU member state, its local authorities, a non-EU member state or public international body of which one or more EU member states are members provided that equivalent protections are in place to that of a UCITS, and provided further that the UCITS holds securities from at least six different issues with securities from any one issue not exceeding 30% of the net assets of the UCITS;
5. a UCITS may not invest more than 20% of its net assets in any one collective investment scheme and the schemes in which a UCITS invests must be UCITS or AIFs with the essential characteristics of a UCITS. Furthermore, investment in AIFs may not, in aggregate, exceed 30% of the UCITS’ net assets;
6. the risk exposure of a UCITS to a counterparty to an OTC derivative may not exceed 5% of net assets. This limit can be raised to 10% in certain circumstances;
7. not more than 20% of the net assets of a UCITS may be invested in deposits made with the same credit institution. Deposits with any one credit institution held as ancillary liquidity must not, subject to exceptions, exceed 10% of net assets; and
8. a UCITS may not acquire any units carrying voting rights which would enable it to exercise a significant influence over the management of the issuer.

Dealing Frequency

A UCITS can be open for dealing daily, weekly or at any other frequency provided that it is open for redemptions at least twice a month (at regular intervals).

A UCITS can be closed for subscriptions at any time following the initial offer period.

Borrowing

A UCITS may not borrow money, grant loans or act as guarantor on behalf of third parties, although it may borrow up to 10% of its net asset value for temporary convenience purposes such as, for example, to meet redemption requests.