What the EU is doing and why
Investment funds are investment products created with the sole purpose of gathering investors' capital, and investing that capital collectively through a portfolio of financial instruments such as stocks, bonds and other securities.
Investment funds play a crucial role in facilitating the accumulation of personal savings, whether for major investments or for retirement. They are also important because they make institutional and personal savings available as loans to companies and projects which contribute to growth and jobs.
As part of the capital markets union (CMU), the EU introduced a series of measures to diversify the funding of EU businesses, strengthening cross border capital flows and provide investors with better investment opportunities.
Collective investment funds
As part of its effort to create a barrier-free market for collective investment funds, the EU has legislation in the following areas
- undertakings for the collective investment in transferable securities, i.e. collective investment funds easily accessible by retail investors
- alternative investment fund managers, i.e. managers of investment schemes designed primarily for professional investors
- european venture capital funds, a subcategory of alternative investment schemes that focus on start-ups and early stage companies
- european social entrepreneurship funds, alternative investment schemes that focus on social enterprises
- european long-term investment funds, i.e. funds that invest on a long-term basis in infrastructure projects, real estate, and small and medium-sized enterprises
- money market funds, i.e. investment funds that invest in short-term debt instruments such as securities issued by banks, businesses or governments
Retail investment products
Investment products are complex and it can be difficult to compare them or fully grasp the risks they involve. To protect investors, the EU has adopted a regulation introducing a key information document (KID), a simple document giving investors key facts in a clear and understandable manner.
A KID is required for products including
- all types of investment funds
- insurance-based investments
- retail structured products
- private pensions
Measures on cross-border distribution of funds
The EU adopted measures to facilitate cross-border distribution of funds, improve transparency, and create a single access to information on national rules related to marketing requirements [and regulatory fees and charges levied] by national competent authorities. This initiative aims to eliminate regulatory barriers to the cross-border distribution of investment funds and enable a better functioning single market and economies of scale.
Policy making timeline
- 20 July 2023Report - MMF
- 19 July 2023Political agreement - UCITS & AIFMD
- 24 May 2023Legislative proposal - PRIIPS
- 27 September 2022Technical advice - EuVECA
- 20 October 2022Political agreement - ELTIF
- 25 November 2021Legislative proposal - AIFMD & ELTIF
- 10 January 2019Report - AIFMD
- 12 March 2018Legislative proposals - Cross-border distribution of funds
- 30 May 2017Political agreement - EuVECA & EuSEF
- 14 July 2016Legislative proposal - EuVECA & EuSEF
- 2 June 2016Consultation - Cross-border distribution of funds
Public consultation on cross-border distribution of investment funds.
End date: 9 October 2016 - 30 September 2015Consultation - EuVECA & EuSEF
- 26 July 2012Consultation - Investment funds
Consultation on investment funds.
End date: 18 October 2012
The Directive on Undertakings for Collective Investment in Transferable Securities (UCITS) is the main European framework covering collective investment schemes. This category of investment funds accounts for around 75% of all collective investments by small investors in Europe.
Basic information
- Text of the UCITS Directive (2009/65/EC)
- Summary of the legislation: Strengthening the global competitiveness of EU investment funds
Delegated and implementing acts
Transposition by EU Member States
- The UCITS Directive was transposed by all EU Member states into their national law.
- Transposition history of the UCITS Directive by EU Member States
- European Securities and Markets Authority's (ESMA) guidelines on the UCITS Directive
- Questions and answers on the UCITS Directive published by ESMA
Legislative history
The Alternative Investment Fund Managers Directive (AIFMD) covers managers of alternative investment schemes designed for professional investors. Alternative investment funds are funds that are not regulated at EU level by the UCITS Directive. They include hedge funds, private equity funds, real estate funds and a wide range of other types of institutional funds.
Basic information
- Text of the AIFMD (2011/61/EU)
- Summary of the legislation: Hedge funds and private equity funds — rules for managers
Delegated and implementing acts
Transposition by EU Member States
- The Alternative Investment Fund Managers Directive was transposed by all EU Member states into their national law.
- Transposition history of the AIFMD by EU Member States
- Questions and answers on the AIFMD published by the Commission
- European Securities and Markets Authority's (ESMA) guidelines on the AIFMD
- Questions and answers on the AIFMD published by ESMA
Ongoing revision
- Ongoing revision of the AIFMD
- Legislative initiative on the review of EU rules on alternative investment fund managers
Legislative history
The European Venture Capital Funds Regulation (EuVECA) covers a subcategory of alternative investment schemes that focus on start-ups and early stage companies. Venture capital investment is an important source of long-term financing to young and innovative companies.
Basic information
- Text of the EuVECA Regulation (345/2013/EU)
- Summary of the legislation: European venture capital funds
Delegated and implementing acts
Implementation by EU Member States
Ongoing revision
- Ongoing revision of the EuVECA Regulation
- Legislative initiative on the review of EU rules on alternative investment fund managers
Legislative history
The European Social Entrepreneurship Funds Regulation (EuSEF) covers alternative investment schemes that focus on social enterprises. These are companies that are set up with the explicit aim to have a positive social impact and address social objectives, rather than only maximising profit. While these enterprises often receive public support, private investment via funds still remains vital to their growth.
Basic information
- Text of the EuSEF Regulation (346/2013/EU)
- Summary of the legislation: European social entrepreneurship funds
Delegated and implementing acts
Implementation by EU Member States
Ongoing revision
- Ongoing revision of the EuSEF Regulation
- Legislative initiative on the review of EU rules on alternative investment fund managers
Legislative history
The European Long-Term Investment Funds Regulation (ELTIF) covers funds that focus on investing in various types of alternative asset classes such as infrastructure, small and medium sized enterprises and real assets.
Basic information
- Text of the ELTIF Regulation (2015/760/EU)
- Summary of the legislation: Funding long-term investment in the EU’s economy
Delegated and implementing acts
Ongoing revision
- Ongoing revision of the ELTIF Regulation
- Legislative initiative on the review of the long-term investment funds
Legislative history
Money market funds (MMFs) are investment vehicles where households, corporate treasurers or insurance companies can obtain a relatively safe and short-term investment for surplus cash. They are an important source of short-term financing for financial institutions, corporates and governments. In order to preserve the integrity and stability of the internal market, the EU adopted a Regulation on MMFs that will make them more resilient to a future financial crisis.
Basic information
Delegated and implementing acts
Legislative history
Basic information
- Text of the PRIIPS Regulation (1286/2014/EU)
- Summary of the legislation: Key information about investment products
Delegated and implementing acts
Ongoing revision
- Ongoing revision of the PRIIPS Regulation
- Legislative initiative on retail investment: measures to increase consumer participation in capital markets
Legislative history
Basic information
- Text of the Cross-Border Distribution of Investment Funds Directive (2019/1160/EU)
- Summary of the legislation: Insurance and reinsurance
Transposition by EU Member States
The Cross-Border Distribution of Investment Funds Directive was transposed by all EU Member states into their national law.
Legislative history
- Original legislative proposal for the Cross-Border Distribution of Investment Funds Directive
- Impact assessment accompanying the legislative proposal for the Cross-Border Distribution of Investment Funds Directive
- Executive summary of the impact assessment accompanying the legislative proposal for the Cross-Border Distribution of Investment Funds Directive
Basic information
- Text of the Cross-Border Distribution of Investment Funds Regulation (2019/1156/EU)
- Summary of the legislation: Cross-border distribution of collective investment undertakings
Delegated and implementing acts
Legislative history
- Original legislative proposal for the Cross-Border Distribution of Investment Funds Regulation
- Impact assessment accompanying the legislative proposal for the Cross-Border Distribution of Investment Funds Regulation
- Executive summary of the impact assessment accompanying the legislative proposal for the Cross-Border Distribution of Investment Funds Regulation