How ‘UCITS squared’ may prove a natural progression
In theory at least, there is little to prevent the development of a flourishing universe of UCITS-compliant funds of funds. Although a UCITS itself is prohibited from investing directly into unregulated hedge funds, investment in other UCITS, closed-end funds, managed accounts and indices are all permissible, as long as they in turn invest in eligible assets.
In the formative stages of the market for UCITS III products, it was chiefly the constraints on their investment freedoms that limited the growth potential of funds of UCITS III funds which in turn would themselves be UCITS-compliant. There were, however, other