The Anatomy of European Investment Fund Law

Abstract

As of 31 December 2016 investment fund managers in the European Union (EU) and the European Economic Area (EEA) managed more than €14trillion, equivalent to 33.2% of worldwide investment fund assets. More importantly all asset classes and fund types experience significant growth for more than a decade. While outside of Europe most commentators point to the UCITS brand’s success to explain the development, little is known about the legal fundamentals underpinning European investment law. This article holds that at least to some extent the remarkable growth story of European investment funds is due to unique features of European investment fund law and regulation. Drawing on this hypothesis, this article introduces to the principles of European investment law, summarizes the most important legislation and highlights to what extent European investment law differs from other fund management legislation. After providing an overview of the relevant sources of law, we introduce to the regulatory objectives of European investment law. Next we explain the pillars of European investment fund law, including the investment triangle, and the joint basis of European manager, depositary, sales and product regulation. We go on to discuss the crucial definitions of and difference between UCITS and AIF, prior to unvealing the unique features of the UCITSD, and hence the UCITS product. We conclude with an analysis of the future trajectory of European’s investment fund law.