The UCITS brand has undergone so much change since its initial introduction that it is barely recognisable to industry practitioners, the FTfm reports.

The UCITS directive, which dates back to 1985, allows for open-ended funds investing in transferable securities to be subject to the same regulation in every member state.

Such legislative uniformity equals expectation that funds authorised in one member state could be sold to the public in another member state without further authorisation.

However, a stipulation of UCITS III, the most recent iteration of the Brussels directive, makes it possible for fund managers to use alternative strategies within the structure.

This, in conjunction with moves towards achieving higher levels of accountability and transparency has encouraged hedge fund managers to launch UCITS funds using complex investment strategies not traditionally deemed suitable for retail investors.

Termed “Newcits”, FTfm reports that these sophisticated funds are not aimed at the retail markets, and may confuse investors.

Claude Kremer, the president of the Luxembourg fund association Alfi, said last week at a press breakfast in London that the idea of a separate category of simplified UCITS was under discussion at a high level within the industry.