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If you’re an asset manager in the United States, launching a fund in Europe involves a completely different regulatory framework. UCITS (Undertakings for Collective Investment in Transferable Securities) is the primary structure for European funds, but it operates under a very different set of rules than what US asset managers are used to.
The first decisions you make about your fund’s domicile, legal structure, governance, and regulatory approval will significantly impact its success in the European market. This guide covers what US asset managers need to know about UCITS fund structures before bringing one to market.
This is part 1 of a two-part series on launching UCITS funds.
As CIOs and business development teams within the finance industry look to evaluate their next market opportunity, it's worth considering UCITS funds. The market for UCITS funds has gained worldwide popularity outside of the US. Investment companies, retail investors, and institutional investors are all drawn to UCITS funds for a host of reasons. Most importantly, they have a regulatory passport that allows for funds registered in one European Union domicile to be sold and traded across other EU states and even some non-EU countries.
Aside from their ability to bypass extra hurdles for local authorization, UCITS funds offer daily liquidity and high investor protection. Thanks to rules around diversification and transparency, UCITS funds can offer additional investor security when compared to many other investment vehicles.
In 2025, UCITS funds set records for inflows. In the first half of 2026, the UCITS ETF market has continued to see record-breaking flows. As of the end of June, UCITS ETFs surpassed $245 billion in flows, a 51% increase from their performance in the first half of 2025.
A majority of UCITS funds are domiciled in Ireland. Ireland was the first European country to launch ETFs and has been ground zero for ETF innovation and maturity in Europe. According to statistics from Irish Funds, over the past 5 years, 84.9% of all flows into UCITS ETFs were to investment strategies domiciled in Ireland. In 2024, 94% of all European ETF launches were domiciled in Ireland. Irish UCITS ETFs account for $1.6 trillion in assets, roughly three quarters of the entire European ETF market.
Asset managers looking to assert their presence as a global brand stand to gain a lot through a UCITS fund. It also gives asset managers access to a growing pool of investors, helping build both brand recognition and grow assets under management in a market that is rapidly evolving.
Additionally, the regulatory passport allows for trading in multiple domiciles through one administrative project, increasing operational efficiency.
Related: How issuers should approach the European UCITS ETF market
Asset managers launching a UCITS fund need to make two critical decisions: what operational structure their fund will use, and what legal structure it will be based on. These choices impact everything from sub-fund management to how the fund is taxed, so it’s important to get them right in order to save time and costs in the long run.
Operational structures are the rules and systems around creating and trading a fund. Finding the right operational structure that stands the best chance of supporting your fund’s objectives across different asset classes is pivotal.
There are several options, including:
No matter which structure you choose, the choice you make will follow the fund for its entire lifecycle, so make sure it can scale.
Asset managers must determine which legal structure will be most advantageous for their UCITS ETF. The legal structure has enormous implications for how a fund is operated and maintained. Different structures also have different tax benefits and opportunities, so picking the one that best aligns with your fund goal is critical.
Options include:
Before moving forward with any of these structures, speak with your legal counsel and compliance team to confirm it aligns with the fund’s domicile requirements and distribution goals.
Every decision in the UCITS fund launch process builds on the one that came before it. Here’s a look at each step in the process, from choosing a domicile to preparing to launch.
This decision should rest primarily with the CIO and senior leadership team. The main domicile options for UCITS funds are Ireland and Luxembourg. This is largely due to the regulatory environment and the tax treatment. The Central bank of Ireland tends to be faster with UCITS authorization, with most funds getting authorized within six to eight weeks. In Luxenbourg, it can take slightly longer, often two or three months.
The ecosystem effect is also in play, as both Ireland and Luxembourg were early ETF adopters and a large industry has grown around them. This means there are more skilled financial services professionals (administrators, custodians, legal firms, and auditors) available who can help stand a product up efficiently. Both countries also offer tax advantages.
The next decision is around fund structure. CIOs, portfolio managers, and legal counsel will want a structure that enables the fund to operate in the fashion that makes the most sense for the issuer and for the fund objectives.
Asset managers looking for more granular information about their fund structure opportunities should review the previous section.
A UCITS management company, or ManCo, is responsible for portfolio management, risk management, and regulatory compliance. Finding the right ManCo is absolutely essential and will be a priority for legal counsel and operations teams. US asset managers who do not have an EU presence may need to appoint a third-party ManCo.
Without a ManCo, a fund cannot legally launch. Fortunately, skilled third-party options are available, particularly in Ireland and Luxembourg where the industry is more developed.
The next step is creating the operational backbone of your UCITS funds. Operations teams and legal counsel will want to make sure to choose the right people for key roles, including depositary, administrator, auditor, legal advisor, and investment manager. These individuals will be responsible for fund accounting and compliance reporting.
With the fund domicile, structure, ManCo, and operational infrastructure set, the next step for legal counsel and compliance officers is to outline and draft the primary documents for the new fund.
The prospectus (an outline of the fund’s investment goals, strategies, risks, and fees), the KIID or Key Investor Information Document (a summary that helps investors compare funds), and the Instrument of Incorporation (a legal document that formally establishes the fund as a legal entity) must all be drafted in a way that meets the regulatory standards of the chosen domicile.
Once materials are ready, the legal counsel and compliance team will submit documents to the appropriate regulatory body. Approval timelines vary from domicile to domicile, and there may be notes or adjustments that need to be made before the product is fully approved.
The two main regulatory bodies that are most likely to be involved are the Central Bank of Ireland for Ireland domiciled funds and the CSSF for products that choose to launch in Luxembourg.
Finally, the fund is ready to launch. Operations teams need to determine share class setup and pricing while sales and business development will want to focus on managing distribution arrangements. Legal counsel will steward the passporting process so the fund can take advantage of the UCITS passport and distribute to other EU member states as well as some non-EU member states.
Check out: Best practices for launching an ETF
UCITS ETFs differ from US ETFs on a number of fronts. There are different rules around diversification, income, and investor safety that asset managers need to understand as their product comes to fruition.
Here are the key components and core principles of UCITS governance.
Compliance and legal counsels for asset managers should be aware that UCITS ETFs are extremely focused on investor protection, with tighter rules and stricter enforcement for issuers who violate any of the regulatory guidelines.
Operations analysts and legal teams should be aware that UCITS funds are designed to protect investors from losing money if the fund manager goes bankrupt. UCITS requires an independent depositary and custodian. This structure also limits counterparty risk by ensuring that the fund’s assets are held separately from those of the management company.
The biggest difference between a US ETF and a UCITS ETF is arguably how they handle diversification. UCITS funds can have no holding that exceeds 10% of the investment fund’s net asset value (NAV) compared to US ETFs which allow for 25% of a fund’s NAV to go toward a single holding.
Traders and operations analysts should note that UCITS funds have stricter rules around liquidity. Investors must be able to redeem shares daily.
Risk managers and compliance officers should note that UCITS framework leans on third-party independent oversight, where US ETFs rely on a board of directors per the Investment Company Act of 1940.
Mandatory documentation is necessary for both US ETF and UCITS regulations. Legal and compliance teams should note that while US ETFs require a statutory prospectus and form N-1A, UCITS ETFs will need a prospectus along with a KIID or a PRIIPs KID.
You might like: 40-Act vs. UCITS: what US asset managers should know
The regulatory requirements for obtaining approval of a UCITS fund are primarily guided by the fund’s domicile, as well as the EU member state in which the fund will launch.
Because of their regulatory environment, most UCITS funds are launched in Ireland. Luxembourg also gets a healthy share of launches, which means that asset managers looking to expand into the EU will be dealing with either the Central Bank of Ireland or the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg.
Approval for a UCITS ETF will take some time, largely depending on how efficiently you can address notes and on the domicile of the product. In Ireland, you can anticipate six to ten weeks, while Luxembourg is usually closer to three months. It's worth noting that these times could vary for a host of reasons.
Once your UCITS fund is approved and launched, you can take advantage of the passporting system to distribute in other EU countries. Passporting is the primary advantage of a UCITS fund. Essentially, every UCITS fund that is authorized in one European Economic Area (EEA) can be marketed and sold across any other EEA country without having to go through a separate regulatory hurdle. Fund managers can submit notification packages to their home domicile regulator, who then reviews the package and shares it with the target EEA country. Once this has happened, the fund can begin marketing in the target EEA country.
It is worth noting that the European Securities and Markets Authority (ESMA) is responsible for ensuring and monitoring products for regulatory consistency across different borders. ESMA’s main remit is to protect investors and maintain the stability of EU financial markets. The is the agency that will monitor your funds and ensure regulatory compliance.
UCITS (Undertakings for Collective Investment in Transferable Securities) is a regulatory framework set by the European Union for the management and cross-border sale of investment funds, including mutual funds and ETFs. They are the dominant fund structure outside the US.
UCITS funds must meet strict requirements for diversification, liquidity, and investor protection. A fund registered in one EU member state can be sold across other EU states through the UCITS passport.
No, not all UCITS funds are ETFs. UCITS is a broad regulatory framework that covers a wide range of European investment funds, including mutual funds, money market funds, and exchange-traded funds. ETFs are one of the fastest-growing fund types within the UCITS framework, but most UCITS funds by number are still mutual funds.
What all UCITS funds have in common, regardless of type, is a common set of requirements for diversification, liquidity, investor protection, and cross-border distribution.
UCITS funds and US ETFs share the same basic structure (both trade on exchange and use in-kind creation and redemption mechanisms), but they operate under distinct regulatory frameworks.
UCITS funds are governed by the EU’s UCITS Directive, while US ETFs fall under the Investment Company Act of 1940 and SEC Rule 6c-11. The most significant differences include stricter diversification limits, mandatory daily liquidity requirements, and stronger investor protection rules. US ETFs generally have lower expense ratios and fewer restrictions on securities lending.
Ireland is the dominant hub for UCITS funds for several reasons. Its Double Tax Treaty with the US reduces withholding tax on US equity dividends from 30% to 15%, which is a significant advantage over most other European domiciles. Ireland was also the first European country to launch ETFs, giving it a head start in developing its operational infrastructure of administrators, custodians, legal firms, and auditors. Today, Irish UCITS ETFs account for around $1.6 trillion in assets, or approximately three quarters of the entire European ETF market.
The European ETF market is growing fast, but accessing it requires a level of preparation that can catch some asset managers off guard. Taking the time to get the structural and regulatory foundations right before launch will have an outsized impact on a fund’s long-term success.
VettaFi works with asset managers to build the index foundation their UCITS ETF needs to launch with confidence. Get in touch with our team today.
If you’re an asset manager in the United States, launching a fund in Europe involves a completely different regulatory framework. UCITS (Undertakings for Collective Investment in Transferable Securities) is the primary structure for European funds, but it operates under a very different set of rules than what US asset managers are used to.
The first decisions you make about your fund’s domicile, legal structure, governance, and regulatory approval will significantly impact its success in the European market. This guide covers what US asset managers need to know about UCITS fund structures before bringing one to market.
This is part 1 of a two-part series on launching UCITS funds.
As CIOs and business development teams within the finance industry look to evaluate their next market opportunity, it's worth considering UCITS funds. The market for UCITS funds has gained worldwide popularity outside of the US. Investment companies, retail investors, and institutional investors are all drawn to UCITS funds for a host of reasons. Most importantly, they have a regulatory passport that allows for funds registered in one European Union domicile to be sold and traded across other EU states and even some non-EU countries.
Aside from their ability to bypass extra hurdles for local authorization, UCITS funds offer daily liquidity and high investor protection. Thanks to rules around diversification and transparency, UCITS funds can offer additional investor security when compared to many other investment vehicles.
In 2025, UCITS funds set records for inflows. In the first half of 2026, the UCITS ETF market has continued to see record-breaking flows. As of the end of June, UCITS ETFs surpassed $245 billion in flows, a 51% increase from their performance in the first half of 2025.
A majority of UCITS funds are domiciled in Ireland. Ireland was the first European country to launch ETFs and has been ground zero for ETF innovation and maturity in Europe. According to statistics from Irish Funds, over the past 5 years, 84.9% of all flows into UCITS ETFs were to investment strategies domiciled in Ireland. In 2024, 94% of all European ETF launches were domiciled in Ireland. Irish UCITS ETFs account for $1.6 trillion in assets, roughly three quarters of the entire European ETF market.
Asset managers looking to assert their presence as a global brand stand to gain a lot through a UCITS fund. It also gives asset managers access to a growing pool of investors, helping build both brand recognition and grow assets under management in a market that is rapidly evolving.
Additionally, the regulatory passport allows for trading in multiple domiciles through one administrative project, increasing operational efficiency.
Related: How issuers should approach the European UCITS ETF market
Asset managers launching a UCITS fund need to make two critical decisions: what operational structure their fund will use, and what legal structure it will be based on. These choices impact everything from sub-fund management to how the fund is taxed, so it’s important to get them right in order to save time and costs in the long run.
Operational structures are the rules and systems around creating and trading a fund. Finding the right operational structure that stands the best chance of supporting your fund’s objectives across different asset classes is pivotal.
There are several options, including:
No matter which structure you choose, the choice you make will follow the fund for its entire lifecycle, so make sure it can scale.
Asset managers must determine which legal structure will be most advantageous for their UCITS ETF. The legal structure has enormous implications for how a fund is operated and maintained. Different structures also have different tax benefits and opportunities, so picking the one that best aligns with your fund goal is critical.
Options include:
Before moving forward with any of these structures, speak with your legal counsel and compliance team to confirm it aligns with the fund’s domicile requirements and distribution goals.
Every decision in the UCITS fund launch process builds on the one that came before it. Here’s a look at each step in the process, from choosing a domicile to preparing to launch.
This decision should rest primarily with the CIO and senior leadership team. The main domicile options for UCITS funds are Ireland and Luxembourg. This is largely due to the regulatory environment and the tax treatment. The Central bank of Ireland tends to be faster with UCITS authorization, with most funds getting authorized within six to eight weeks. In Luxenbourg, it can take slightly longer, often two or three months.
The ecosystem effect is also in play, as both Ireland and Luxembourg were early ETF adopters and a large industry has grown around them. This means there are more skilled financial services professionals (administrators, custodians, legal firms, and auditors) available who can help stand a product up efficiently. Both countries also offer tax advantages.
The next decision is around fund structure. CIOs, portfolio managers, and legal counsel will want a structure that enables the fund to operate in the fashion that makes the most sense for the issuer and for the fund objectives.
Asset managers looking for more granular information about their fund structure opportunities should review the previous section.
A UCITS management company, or ManCo, is responsible for portfolio management, risk management, and regulatory compliance. Finding the right ManCo is absolutely essential and will be a priority for legal counsel and operations teams. US asset managers who do not have an EU presence may need to appoint a third-party ManCo.
Without a ManCo, a fund cannot legally launch. Fortunately, skilled third-party options are available, particularly in Ireland and Luxembourg where the industry is more developed.
The next step is creating the operational backbone of your UCITS funds. Operations teams and legal counsel will want to make sure to choose the right people for key roles, including depositary, administrator, auditor, legal advisor, and investment manager. These individuals will be responsible for fund accounting and compliance reporting.
With the fund domicile, structure, ManCo, and operational infrastructure set, the next step for legal counsel and compliance officers is to outline and draft the primary documents for the new fund.
The prospectus (an outline of the fund’s investment goals, strategies, risks, and fees), the KIID or Key Investor Information Document (a summary that helps investors compare funds), and the Instrument of Incorporation (a legal document that formally establishes the fund as a legal entity) must all be drafted in a way that meets the regulatory standards of the chosen domicile.
Once materials are ready, the legal counsel and compliance team will submit documents to the appropriate regulatory body. Approval timelines vary from domicile to domicile, and there may be notes or adjustments that need to be made before the product is fully approved.
The two main regulatory bodies that are most likely to be involved are the Central Bank of Ireland for Ireland domiciled funds and the CSSF for products that choose to launch in Luxembourg.
Finally, the fund is ready to launch. Operations teams need to determine share class setup and pricing while sales and business development will want to focus on managing distribution arrangements. Legal counsel will steward the passporting process so the fund can take advantage of the UCITS passport and distribute to other EU member states as well as some non-EU member states.
Check out: Best practices for launching an ETF
UCITS ETFs differ from US ETFs on a number of fronts. There are different rules around diversification, income, and investor safety that asset managers need to understand as their product comes to fruition.
Here are the key components and core principles of UCITS governance.
Compliance and legal counsels for asset managers should be aware that UCITS ETFs are extremely focused on investor protection, with tighter rules and stricter enforcement for issuers who violate any of the regulatory guidelines.
Operations analysts and legal teams should be aware that UCITS funds are designed to protect investors from losing money if the fund manager goes bankrupt. UCITS requires an independent depositary and custodian. This structure also limits counterparty risk by ensuring that the fund’s assets are held separately from those of the management company.
The biggest difference between a US ETF and a UCITS ETF is arguably how they handle diversification. UCITS funds can have no holding that exceeds 10% of the investment fund’s net asset value (NAV) compared to US ETFs which allow for 25% of a fund’s NAV to go toward a single holding.
Traders and operations analysts should note that UCITS funds have stricter rules around liquidity. Investors must be able to redeem shares daily.
Risk managers and compliance officers should note that UCITS framework leans on third-party independent oversight, where US ETFs rely on a board of directors per the Investment Company Act of 1940.
Mandatory documentation is necessary for both US ETF and UCITS regulations. Legal and compliance teams should note that while US ETFs require a statutory prospectus and form N-1A, UCITS ETFs will need a prospectus along with a KIID or a PRIIPs KID.
You might like: 40-Act vs. UCITS: what US asset managers should know
The regulatory requirements for obtaining approval of a UCITS fund are primarily guided by the fund’s domicile, as well as the EU member state in which the fund will launch.
Because of their regulatory environment, most UCITS funds are launched in Ireland. Luxembourg also gets a healthy share of launches, which means that asset managers looking to expand into the EU will be dealing with either the Central Bank of Ireland or the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg.
Approval for a UCITS ETF will take some time, largely depending on how efficiently you can address notes and on the domicile of the product. In Ireland, you can anticipate six to ten weeks, while Luxembourg is usually closer to three months. It's worth noting that these times could vary for a host of reasons.
Once your UCITS fund is approved and launched, you can take advantage of the passporting system to distribute in other EU countries. Passporting is the primary advantage of a UCITS fund. Essentially, every UCITS fund that is authorized in one European Economic Area (EEA) can be marketed and sold across any other EEA country without having to go through a separate regulatory hurdle. Fund managers can submit notification packages to their home domicile regulator, who then reviews the package and shares it with the target EEA country. Once this has happened, the fund can begin marketing in the target EEA country.
It is worth noting that the European Securities and Markets Authority (ESMA) is responsible for ensuring and monitoring products for regulatory consistency across different borders. ESMA’s main remit is to protect investors and maintain the stability of EU financial markets. The is the agency that will monitor your funds and ensure regulatory compliance.
UCITS (Undertakings for Collective Investment in Transferable Securities) is a regulatory framework set by the European Union for the management and cross-border sale of investment funds, including mutual funds and ETFs. They are the dominant fund structure outside the US.
UCITS funds must meet strict requirements for diversification, liquidity, and investor protection. A fund registered in one EU member state can be sold across other EU states through the UCITS passport.
No, not all UCITS funds are ETFs. UCITS is a broad regulatory framework that covers a wide range of European investment funds, including mutual funds, money market funds, and exchange-traded funds. ETFs are one of the fastest-growing fund types within the UCITS framework, but most UCITS funds by number are still mutual funds.
What all UCITS funds have in common, regardless of type, is a common set of requirements for diversification, liquidity, investor protection, and cross-border distribution.
UCITS funds and US ETFs share the same basic structure (both trade on exchange and use in-kind creation and redemption mechanisms), but they operate under distinct regulatory frameworks.
UCITS funds are governed by the EU’s UCITS Directive, while US ETFs fall under the Investment Company Act of 1940 and SEC Rule 6c-11. The most significant differences include stricter diversification limits, mandatory daily liquidity requirements, and stronger investor protection rules. US ETFs generally have lower expense ratios and fewer restrictions on securities lending.
Ireland is the dominant hub for UCITS funds for several reasons. Its Double Tax Treaty with the US reduces withholding tax on US equity dividends from 30% to 15%, which is a significant advantage over most other European domiciles. Ireland was also the first European country to launch ETFs, giving it a head start in developing its operational infrastructure of administrators, custodians, legal firms, and auditors. Today, Irish UCITS ETFs account for around $1.6 trillion in assets, or approximately three quarters of the entire European ETF market.
The European ETF market is growing fast, but accessing it requires a level of preparation that can catch some asset managers off guard. Taking the time to get the structural and regulatory foundations right before launch will have an outsized impact on a fund’s long-term success.
VettaFi works with asset managers to build the index foundation their UCITS ETF needs to launch with confidence. Get in touch with our team today.
