Section 2

Funds and Players

1
Define a fund.

A fund is an investment vehicle owned by investors

which enables them to invest on a pooled basis.

2
Types of funds available in
Ireland.
 Vehicle
 Unit Trust
 Investment Company
 Structure
 Umbrella fund
 Stand-alone fund

3
Types of funds available in
Ireland.
 Regulatory Status
 UCITS (Undertaking for Collective Investment in
Transferable Securities)
 Non-UCITS
 Retail funds
 Professional funds
 Qualifying investor funds

4
What is a Unit Trust?

A Unit Trust is a specific type of trust structure which

can be used as a vehicle for an investment fund provided
it meets certain criteria.

The principal legislation in Ireland is the Unit Trust Act,

1990

5
What is a Unit Trust?

Unit trust is a separate legal entity used as a vehicle for

an investment fund.

Assets held “on trust”.

Trustees.

Investors entitlement.

Legal ownership of the fund`s assets.

6
What is a Unit?

Investors ( Mary) in a trust are allocated a “unit” and

this represents the investors (Mary’s share) share in the
assets of a Unit Trust.

Value of a unit fluctuates daily.

7
The Trust Deed ( rule book )

An Irish Unit Trust is constituted under a Trust Deed

made between
(1) A Management Company
(2) A Trustee Company.

It is a Legal document.

It is the rule book of the Unit Trust.

8
The Trust Deed.

Rules:
N.a.v.
Transfer agent
Investment policy
Subscription and redemption rules
Meetings of unit holders
Termination

9
What is a Company?

A Company is a form of enterprise, where the

shareholders enjoy limited liability.

Companies act 1963 to 2013

10
UCITS

UCITS is an abbreviation for an Undertaking for

Collective Investment in Transferable Securities

Directive of the Council of the European Community

85/611/EEC

Central Bank of Ireland

www.dilloneustace.ie A Guide to UCITS in Ireland

11
What is a UCITS

 UCITS must be funded by open offer to the public

 Must be open ended
 Investments must be made by transferable security
 UCITS must be entrusted to an independent trustee

12
Rules and restrictions on
UCITS funds
 Ensure diversification of risk ( spreading the risk)
 Effective portfolio management
 A UCITS can hedge
 Can not acquire management control over companies
it investments in
 Hold cash deposits
 Cant hold precious metals
 May not sell short
 Only can invest small amounts in other funds

13
Non UCITS

 This Fund can also be established

in Ireland which do not benefit
from the same Marketing
advantages as a UCITS fund but
which are subject to more flexible
investment restrictions.

14
Rules
Non UCITS
• Governed by the Central Bank
• Minimum subscription is 100,000 euros
Examples
• Funds of funds
• Feeder funds
• Futures
• Options

15
Comparison of unit Trusts
and Investment Companies

Unit trust Investment company

 A unit trust does not  A company has a separate
have a separate legal legal existence. The assets
identity but is of the fund belong to the
company and the investors
represented by the
in the fund own shares in
trustees as legal the company. Custody of
owners of the assets, the assets is entrusted to
on behalf of the unit an independent custodian
holders who are the who fulfills many
beneficiaries of the functions corresponding to
trust. that of a trustee of a unit
trust.

16
Comparison of unit Trusts
and Investment Companies

Unit Trust Investment Company

 A unit trust must have  An investment company has
a management
a separate legal existence.
The assets of the fund
belong to the company and
the investors in the fund
owns shares in the
company. Custody of the
assets is entrusted to an
independent custodian who
fulfills many functions
corresponding to that of a
trustee of a unit trust.

17
Comparison of unit Trusts
and Investment Companies

Unit trust Investment Company

 A unit trust issue units  A company issues
which represent an shares which are
entitlement to a equivalent in valve to a
portion of the assets of proportion of the net
the fund assets of the company.

18
Comparison of unit Trusts
and Investment Companies

Unit Trust Investment Company

 A unit trust is governed  A company is governed
by either the UCITS by the Companies Acts,
regulations or the Unit 1963 – 2013, the UCITS
Trust Act, 1990 and the regulations ( if a UCITS
trust deed. fund) and the
Memorandum and
Articles of Association.

19
Comparison of unit Trusts
and Investment Companies

Unit trust Investment Company

 A unit trust does not  A company must hold
hold an annual general an annual general
meeting meeting of
shareholders.

20
Umbrella fund

21
Umbrella fund

22
Umbrella fund

23
Umbrella fund

24
Hedge Funds

25
Hedge Funds

26
Hedge Funds

27
Hedge Funds

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