NonUCITS

Non-UCITS refers to collective investment schemes that do not operate under the European Union’s UCITS Directive. These funds are typically marketed to professional or institutional investors rather than the general retail audience, and they cover a broad range of strategies and asset classes, including hedge funds, private equity, real estate, commodities, and other alternative approaches.

Regulatory framework and marketing

In the EU, non-UCITS funds are usually regulated under the home country regime and, if marketed within the EU, may fall under the rules of the Alternative Investment Fund Managers Directive (AIFMD). Marketing to retail investors is generally restricted or prohibited in many jurisdictions, while marketing to professional or qualified investors may be allowed under national private placement regimes or through an AIFMD authorization. Outside the EU, non-UCITS funds are governed by the jurisdiction where they are domiciled and by local securities and investment laws, which can vary widely.

Key differences from UCITS

Non-UCITS funds typically have more flexibility in asset selection, leverage, liquidity terms, and the use of derivatives than UCITS funds. This can enable potentially higher-return strategies but also carries higher risk, lower liquidity, and greater complexity. Disclosure, valuation, risk management, and investor protections tend to be less standardized than in UCITS funds.

Investor profile and considerations

Non-UCITS funds are primarily aimed at professional investors with sufficient experience and resources to assess complex strategies and risks. They may offer access to specialized exposures and strategies not available to retail investors, but investors should carefully evaluate liquidity, leverage, fees, counterparties, and transparency.

See also: UCITS, AIFMD, private placement regimes.