UCITS ETF definition
UCITS is short for Undertakings for Collective Investment in Transferable Securities. It is a directive from the European Union that establishes rules regarding investment funds that are marketed in the EU.
The UCITS directive makes it easier for investment fund providers to sell their products throughout the EU and at the same time it offers protection to investors.
Some highlights of UCITS
1. A UCITS license may be obtained in 1 EU country and then it will automatically apply to all EU member states.
2. UCITS directives may be changed over time. In the last 30 years we have seen 6 amendments to existing UCITS directives and there will be more to follow for sure.
3. The protection UCITS offers is especially aimed at individual investors although the directive also protects professional investors.
4. UCITS has grown out as a brand that will help the sale of financial products. Once a UCITS license is obtained for an investment fund or ETF the EU market opens up.
5. Many UCITS rules are aimed at reducing the risk by safeguarding the way the investment is managed and controlled.
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