As a specialist compliance and consulting company, XCAP Global and our partners work with you in creating a fund structure that is cost effective, compliant and best suits your objectives.
The most common types of fund structure that we assist with are:
- AIFs - Alternative Investment Funds;
- UCITS - Undertaking of Collective Investment in Transferable Securities.
So, what are the main differences between the two structures and why do certain managers prefer one over the other?
An Alternative Investment Fund (AIF) may hold investments in a broad range of asset classes ranging from commodities, securities, funds, derivatives and carbon credits to real estate and antiques. AIFs are typically regarded as the most flexible type of Collective Investment Scheme with regard to the number of asset classes they can invest in. However, it should be noted that AIFs can be domiciled both onshore (Luxembourg) or offshore locations (Cayman Islands).
Whilst some investment managers may favour the AIF structure due to its flexibility, the unregulated nature of these funds can make it more difficult raising capital from retail investors. Investors in AIFs therefore tend to be institutional investors, family offices and sophisticated high net worth individuals.
Undertaking of Collective Investments in Transferable Securities – UCITS
A UCITS is a regulated fund which is registered mainly in Ireland or Luxembourg and promoted to investors globally, whilst adhering to local regulatory guidelines and investor protection requirements. A UCITS has a strict investment criteria which is typically made up of liquid assets. This is ideal for investor protection in that if an investor wishes to withdraw their investment, they can do so readily.
Since their launch in the mid 1980s, UCITS have built a strong reputation as being liquid and well-regulated investment funds. They are popular investment vehicles throughout Europe, Asia and Emerging Market countries for those investors seeking to deploy capital into a Collective Investment Scheme.
As UCITS are marketed to Retail investors as well as Pension Funds and Institutional clients, they are regulated to a higher level in comparison to an AIF. There are therefore higher operating costs, regulatory filing requirements and various ongoing compliance requirements associated with UCITS.
Also see our Fund Platform section by clicking here.
|Domicile||Offshore||Onshore - EU|
|Compliance Requirements||AIFM License||CIS Permission + UCITS Restriction|
|Investor Type||Professional + Retail||Professional + Retail|
|Set-Up Cost||US$ 10,000 – 20,000||EUR 75,000 – 100,000|
|Investment Mandate||Traditional + Alternative||Restricted Universe of Assets|
|Ability to Attract Investment||Offshore Domicile & Light Touch Regulation makes AIF's more suitable for professional & institutional investors||Greater Regulation & Liquid Portfolio makes UCITS more suitable for Retail investors|
Which Fund Structure Is Right For Me? - AIF or UCITS ?
The answer to this question largely depends on the factors outlined below, which we would take into account, whilst working with you in reaching a conclusion:
- Category of investor the fund will be marketed to;
- Investment mandate and asset classes invested in;
- Jurisdiction of the fund;
- Size of capital raising;
- Regulatory permissions of the Investment Manager.