Comment by Joy Dunbar, Editor of Absolute UCITS
UCITS is in many ways just the older and more established fund
sibling of the Alternative Investment Fund Managers
European financial regulators, legislators and politicians
created these respective fund structure regulations under very
The UCITS Directive was established to create a harmonised,
uniformed and cross-border fund structure between different
The AIFMD was the European response to the global financial
But as fund structure siblings they share many similarities as
well as differences.
Why is this significant?
Since the AIFMD was formed initially in 2009, European
regulators have responded by tweaking one framework –
which also means changes to the other.
A change in UCITS Directive will have an impact on the AIFM
Directive and vice versa – this is essentially because
an AIF is defined, for regulatory purposes at least, as not
being a UCITS.
A recent example of this comes with the new UCITS V Directive,
which deals with issues like remuneration, depositories and
liabilities, itself a direct response to the AIFMD. The new
directive brings the UCITS framework into line with the
There is an unwritten rule that UCITS funds, which are aimed at
retail investors, have to be at the same standard or higher
than funds which come under the umbrella of the AIFMD
– which is aimed at institutional and professional
While the so-called UCITS VI Directive is reviewing which
eligible assets should be included in the framework in the
future – which may or may not include illiquid assets
and the use of derivatives –it will, I expect, also
have implications for future AIFMD Directives going
For the market, however, it will be all too easy to confuse one
fund sibling with another – which may result in
ensuing problems for fund managers trying to operate parallel
funds under the AIFM and UCITS Directives.
Nevertheless, at least until the level two details of the AIFMD
are published and transposed, I suspect that UCITS shall be the
more attractive option.
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