Types of fund


1. Undertaking for collective investment in transferable securities (UCITS)

(legal basis: UCITSA, UCITSO)

These are securities funds which adhere to the provisions of the UCITS Directive in their investments. Within a year of receiving approval they must have minimum assets of EUR 1.25 million or the equivalent sum in Swiss francs (Art. 9 para. 4 UCITSA, Art. 13 para. 2 UCITSO). A key characteristic of funds configured as UCITS is that, once approved in Liechtenstein and subject to prior notification of the FMA, they can be offered for sale throughout the entire EEA (single licence and European passport; Art. 97 et seq. UCITSA, Art. 107 et seq. UCITSO). They also allow the creation of what are known as “master-feeder structures” (Art. 60 et seq. UCITSA, Art. 71 et seq. UCITSO). Cross-border mergers of funds are possible (Art. 38 et seq. UCITSA, Art. 62 et seq. UCITSO). The level of diversification prescribed by the investment regulations need not be achieved until six months after the fund’s launch, although the principle of diversification must still be applied at all times (Art. 59 para. 3 UCITSA, Art. 4 in conjunction with Art. 69-70 UCITSO). The fund must be valued at least twice a month and the valuation must be in line with customary market practices and international standards (Art. 78 para. 1 UCITSA, Art. 5 UCITSO). With a view to strengthening investor protection, for all fund categories the information and characteristics of the fund that are essential to the investor are clearly and generally comprehensibly described in a standardised summary format in at least one official language of each country in which the fund is distributed (key investor information; Art. 80 et seq. UCITSA, Art. 93 et seq. UCITSO). This type of fund can also be configured as:

  • an umbrella fund (Art. 2 para. 2 UCITSA, Art. 2 para. 2 and 3 UCITSO), or

  • an index fund (Art. 55 UCITSA, Art. 4 para. 2 UCITSO).

If you require further information, we at BENDURA FUND MANAGEMENT ALPHA AG would be delighted to arrange a meeting in person.


2. Alternative investment fund (AIF)

(legal basis: AIFMA, AIFMO)

The statutory framework for AIFs generally covers any fund that is unable and/or not intended to comply at all times with the provisions of the UCITS Act. It should in any event be noted that the AIFMA does not regulate the product so much as the managers of that product. Its underlying aim was the internationally held political view that tighter regulation of the actual managers would indirectly enhance the quality of the managed AIFs.

As a result, a licensed manager under the AIFMA usually has a large degree of freedom regarding the composition of the actual product. AIFs may hold all kinds of assets and may engage in borrowing and lending. Moreover, under the AIFMA it is possible – in consultation with the appointed depositary – to appoint sub-custodians and to outsource the actual securities trading to qualified brokers (known as prime brokers).

This large degree of freedom concerning the composition of the actual product goes hand in hand with certain restrictions on the permitted investors. AIFs are normally intended for professional investors as defined in the MiFiD Directive, subject to supplementary regulations at national level. The definition of the typical AIF investor according to MiFiD can be found here: link

The minimum investment in an AIF is usually CHF 100,000 per investor; for economic reasons the total volume of an AIF should in all cases be in excess of CHF 10,000,000, even if the statutory minimum volume of EUR 1.25m (or foreign currency equivalent) is significantly lower.

If you require further information, we at BENDURA FUND MANAGEMENT ALPHA AG would be delighted to arrange a meeting in person.


3. Investment undertaking (IU)

(legal basis: IUA, IUO)

In 2005 the original version of the IUA was expanded to include the “fund for qualified investors” category. With regard to its flexibility in terms of the permissible assets, this type of fund was not dissimilar to the modern AIF. With the introduction of the AIFM Directive at European level and its implementation in local law throughout the EU and the EEA, national provisions were largely replaced by the AIFMA. In certain countries, including Liechtenstein, however, there was a recognised need for national funds governed by somewhat looser regulation and, in exchange, subject to significant restrictions. The national IUA in its current form has existed since October 2016 and chiefly serves as a way of structuring the assets of selected investors while simultaneously subjecting those assets (and their managers) to a certain degree of regulation in exchange for some of the benefits of a classic investment fund (e.g. tax exemption in Liechtenstein).

The IUA (Art 3. para.1) provides for its own applicability as follows: “An investment undertaking is an undertaking for collective investment, including any sub-funds, which

  1. is neither a UCITS pursuant to the UCITSA nor an AIF pursuant to the AIFMA;

  2. is intended exclusively for qualified investors; and

  3. does not amass capital;…”

This means that, according to its original wording, the IUA is not suitable (for instance) for facilitating distribution of the fund to unknown investors or using a European passport to that end. It is instead intended to serve as a structuring tool for existing investors. Based on this distinction regarding the investors, Art. 5 IUA provides a logical classification of the permissible types of funds pursuant to the IUA:

a) investment undertaking for a single investor;

b) investment undertaking for a family;

c) investment undertaking for a community of interests;

d) investment undertaking for a corporate concern.


If you require further information, we at BENDURA FUND MANAGEMENT ALPHA AG would be delighted to arrange a meeting in person.