Weather, Facebook and UCITS: What You Need to Know About Investing in the UK

UCITS stands for Undertakings for Collective Investment in Transferable Securities, which are regulated investment funds that can be sold to the general public throughout the EU. UCITS funds must comply with the requirements introduced under the EU’s UCITS Directive, as well as the relevant UK laws and regulations.

Some of the main investment compliance sections referring rules for UK UCITS are:

The scheme property of each UCITS fund must be invested only in accordance with the provisions in sections COLL 5.2 to COLL 5.5 of the FCA Handbook.
The scheme property of each UCITS fund must aim to provide a prudent spread of risk, taking into account the investment objectives and policy of the fund as stated in the most recently published prospectus.
The UCITS fund must appoint a single depositary for each fund, which must be an entity eligible to act as a depositary of a UCITS under the UCITS Directive.
The depositary of a UCITS fund must perform the duties of safekeeping the assets of the fund, monitoring cash movements to and from the fund, and overseeing the fund manager’s performance of its key functions.
The depositary of a UCITS fund is liable for the avoidable loss of a financial instrument held in custody, and must ensure that assets held in custody by the depositary or its delegate are protected in the event of the depositary or its delegate becoming insolvent.
The UCITS fund manager must have remuneration policies, complying with certain remuneration principles, covering their key staff and must make those policies transparent.
The UCITS fund manager and the depositary of a UCITS fund must comply with the administrative sanctions that are available to the regulators for breaches of the UCITS Directive.

Be with us, in the upcoming article we will be answering all of the questions in your mind related to UCITS!

How to Comply with the UCITS Directive in the UK: A Guide for Fund Managers and Depositaries
UCITS Funds in the UK: Benefits, Risks and Compliance Rules
What is UCITS and Why is it Important for UK Investors?
UCITS V: The Latest Changes and Requirements for UK Funds

Lets look at some of the actual limits with respect to investment compliance for UK UCITS:

UCITS stands for Undertakings for Collective Investment in Transferable Securities, which are regulated investment funds that can be sold to the general public throughout the EU. UCITS funds must comply with the requirements introduced under the EU’s UCITS Directive, as well as the relevant UK laws and regulations.
The scheme property of each UCITS fund must be invested only in accordance with the provisions in sections COLL 5.2 to COLL 5.5 of the FCA Handbook. These sections specify the general investment powers and limits, the eligible markets, the spread of investments, the cover for investment in derivatives and forward transactions, and the investment in collective investment schemes for UCITS funds.
Some of the main investment limits for UK UCITS are:
- The maximum amount a UCITS fund may invest in transferable securities and money market instruments issued by the same body is 5% of the scheme property, unless the issuer is a member state, a public international body, or an investment company with variable capital.
- The maximum amount a UCITS fund may invest in covered bonds issued by the same body is 25% of the scheme property, as long as the covered bonds meet the Covered Bonds Directive criteria.
- The maximum amount a UCITS fund may invest in bank deposits with the same body is 20% of the scheme property, unless the body is an EU credit institution or a bank authorised in a member state.
- The maximum amount a UCITS fund may be exposed to a counterparty in derivatives and forward transactions is 10% of the scheme property, if the counterparty is an EU credit institution, or 5%, if the counterparty is another regulated entity.
- The maximum amount a UCITS fund may invest in units of the same UCITS or non-UCITS collective investment scheme is 20% of the scheme property, unless the scheme is a feeder UCITS.
- The 5/10/40 rule states that a UCITS fund can only invest up to 10% in a single issuer, and that concentrated investments in excess of 5% must not exceed 40% of the total portfolio, with some exceptions.

These limits are intended to ensure a prudent spread of risk and diversification of the scheme property, in accordance with the UCITS Directive and the FCA Handbook. Some of these limits may be increased or waived under certain conditions, such as when the issuer is a member state, a public international body, or an investment company with variable capital. For more details, please refer to the sources provided.

Please note that these are only some of the investment limits for UK UCITS, and there may be other rules and conditions that apply. For more details, please refer to the sources provided or consult a professional adviser.