Within the Investment and Borrowing Powers section of the prospectus you will often come across additional investment rules that are more restrictive that the core regulations.
Example: Global Equity UCITS Fund
The Investment Objectives and Policies section will contain the scheme specific investment rules, i.e. the prospectus rules.
The Investment and Borrowing Powers section will contain the regulatory rules applicable to the fund type, however, within this area of the prospectus we will also need to look out for any restrictions that are narrower than the core regulatory rules.
The following are the core provisions that we are looking to identify:
| Standard UCITS Rules | Common provisions which are more restrictive |
|---|---|
| UCITS can invest 100% in warrants | Max 5% /10% in warrants |
| UCITS can invest in aggregate max 100% in other CIS | CIS can invest max 10% in aggregate in other CIS* |
| UCITS can use derivatives for investment purpose | Many UCITS will restrict derivative usage to EPM |
* A UCITS fund can only invest into CIS that restrict their investments in other CIS to max 10% NAV. The UCITS itself can invest up to 100% in other CIS. Typically, we can have an additional provision that will restrict its max investment in other CIS to 10%.