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Memos from Howard Marks: Ruminating on Asset AllocationLux UCI Part II
A European tax-efficient, flexible alternative investment fund
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The Basics
UCI Part II funds offer flexibility and efficiency in structuring and managing alternative investments.
A fund set up under Part II of the Luxembourg Law of 17 December 2010 on undertakings for collective investment (UCIs) is an investment fund that can invest in in a wide range of assets, such as real estate, private equity, infrastructure and debt. It qualifies as alternative investment fund (AIF) and can be sold to all types of investors, subject to compliance with local marketing rules.
UCI Part II funds have an appointed Alternative Investment Fund Manager (EU AIFM) that can market their shares (directly or through its delegates) via a European marketing passport to investors across the EU.
UCI Part II funds can be constituted under various corporate or contractual structures and may be open-ended or closed-ended. They can be set up as a single fund or as an umbrella fund with multiple compartments.
A Part II fund must authorised by the Commission de Surveillance du Secteur Financier (CSSF) before commencing its activity and it is supervised by the CSSF on an ongoing basis by means of regular reporting requirements
Features
Potential benefits and key features of UCI Part II funds include:
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Access
An efficient way for investors to access various alternative investments
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Regulated Structure
Authorised and supervised by the CSSF in Luxembourg
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Diversification1
UCI Part II Funds typically invest in a diverse range of assets, which can help to reduce risk by spreading out investments across different markets, industries, and asset classes.
1 Diversification does not ensure a profit or protect against loss.