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  1. Point in time
    2006-07-07

CIS 5A.11 Fund of funds schemes

Application

CIS 5A.11.1R

This section (CIS 5A.11) applies to authorised fund managers of fund of funds schemes.

Introduction

CIS 5A.11.2G
  1. (1)

    This section (CIS 5A.11) sets out specific rules for fund of funds schemes. Fund of funds schemes are authorised funds designed to invest in a combination of at least five regulated collective investment schemes. A fund of funds scheme may combine investment in money market schemes or recognised schemes equivalent to a money market scheme, with investment in any one other permitted category of scheme. Alternatively, a fund of funds scheme may invest only in money market schemes or in recognised schemes equivalent to a money market scheme or only in regulated collective investment schemes from any one other permitted category of scheme.

  2. (2)

    The requirements in this section preserve product distinctiveness in the case of fund of funds schemes.

  3. (3)

    For the purpose of this section, each sub-fund of an umbrella scheme and of an equivalent recognised scheme is to be treated as if it were a separate authorised fund or separate scheme.

Fund of funds schemes: general

CIS 5A.11.3R
  1. (1)

    The scheme property of a fund of funds scheme must, except where otherwise provided in the rules in this chapter, only consist of units in regulated collective investment schemes.

  2. (2)

    A fund of funds scheme may not invest in:

    1. (a)

      a fund of funds scheme;

    2. (b)

      a feeder fund;

    3. (c)

      any recognised scheme which is dedicated to investment in a number of regulated collective investment schemes;

    4. (d)

      any recognised scheme which is dedicated to investment in a single regulated collective investment scheme or in a single eligible investment trust; and

    5. (e)

      any sub-fund of an umbrella scheme or sub-fund of any other recognised scheme which is equivalent to a scheme within (a) to (d).

  3. (3)

    Not more than 20% in value of the scheme property is to consist of units in any one regulated collective investment scheme.

  4. (4)

    The following also apply to fund of funds schemes:

    1. (a)

      CIS 5A.2 (General investment powers and limits for authorised funds);

    2. (b)

      CIS 5A.13 (Efficient portfolio management);

    3. (c)

      CIS 5A.15 (Cash, borrowing, lending and other provisions); and

    4. (d)

      CIS 5A.16 (Cover for sales).

Eligible combinations of scheme

CIS 5A.11.4R
  1. (1)

    A fund of funds scheme may invest in units in any five or more authorised funds within:

    1. (a)

      any one of:

      1. (i)

        UCITS Schemes;

      2. (ii)

        CIS 5A.4 (Securities schemes);

      3. (iii)

        CIS 5A.5 (Money market schemes);

      4. (iv)

        CIS 5A.6 (Futures and options schemes);

      5. (v)

        CIS 5A.7 (Geared futures and options schemes);

      6. (vi)

        CIS 5A.8 (Property schemes); or

      7. (vii)

        CIS 5A.9 (Warrant schemes); or

    2. (b)

      any combination of:

      1. (i)

        UCITS schemes;

      2. (ii)

        CIS 5A.4 (Securities schemes); and

      3. (iii)

        CIS 5A.5 (Money market schemes).12

  2. (2)

    A fund of funds scheme may invest in units in one or more money market schemes (within CIS 5A.5 (Money market schemes)) and in units in any one or more authorised funds within any one scheme type in (1)(a) or any combination permitted by (1)(b).2

  3. (3)

    Each sub-fund of an umbrella scheme and each sub-fund of any recognised scheme that is equivalent to an umbrella scheme is to be treated for the purposes of (CIS 5A.11.4 R) and CIS 5A.11.3 R (3)as if it were a separate scheme.

  4. (4)

    A recognised scheme may be treated for the purpose of this rule (CIS 5A.11.4 R) as if it were a scheme falling within the section which would be the relevant section if the recognised scheme were an authorised fund.