What is ‘Enhanced’?
Enhanced refers to the full range of UCITS III powers available to the Investec Enhanced Natural Resources Fund.
The ability to go 'long and short' affords some protection against downside in the market meaning the Fund can make money in both an upward or downward market. It may increase the potential for returns and could help the fund achieve its total return objective.
'Undertakings for Collective Investment in Transferable Securities' (UCITS) are a set of European Union directives that aim to allow collective investment schemes to operate freely throughout the EU on the basis of a single authorisation from one member state. In practice many EU member nations have imposed additional regulatory requirements that have impeded free operation with the effect of protecting local asset managers.
A collective investment fund may apply for UCITS status in order to allow EU-wide marketing. The concept is to create a single market in transferable securities across the EU. With a larger market the economies of scale will reduce costs for investment managers which can be passed on to consumers.
What is the difference between UCITS II and UCITS III?
UCITS, which stands for Undertaking for Collective Investment in Transferable Securities, was first introduced in 1985. It was intended to establish a more open pan-European market in collective investment schemes. This culminated in new proposals being put forward by the EU Commission in 1998 that were eventually formally adopted by the EU in December 2001. There were actually two directives published on the same day – UCITS II and UCITS III – but the two collectively are commonly known as Ucits III.
UCITS II is also known as the Management Directive and was intended to establish a passport for management companies that would allow a broad range of activities throughout the EU. Where this directive has had the most impact in the UK is in the introduction of the Simplified Prospectus which prescribes the form and content of marketing material for a Ucits scheme.
UCITS III is also known as the Product Directive. It’s now possible to establish a far more dynamic suite of investment funds using UCITS than was previously the case. For example, money market funds, fund-of-funds, and funds making speculative investment via derivatives can all fall within the UCITS regime, as well as funds made up using all available asset classes within a single mandate. Ucits III has therefore opened the doors to funds which can pursue approaches such as absolute return strategies in a way which could not be achieved under the previous regime.
