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Introduction to Non UCITS Retail Schemes (NURS)

The value of investments can fall as well as rise; you may not get back what you invest. If you’re not sure about investing, seek independent advice.

Two of the most popular types of UK investment funds are unit trusts and open ended investment companies (OEICs) – which, as legal structures, follow particular rules aimed at protecting investors.

It makes little difference to an investor whether a fund runs legally as a unit trust or an OEIC. Both structures of funds though can be run according to the requirements of the Undertaking for the Collective Investment of Transferable Securities (UCITS) regulations, a set of rules created by the European Commission that cover retail funds, or Non-UCITS Retail Schemes (NURS) rules, which don’t meet with all the conditions required of UCITS.

Most unit trusts and OEICs, and all Exchange Traded Funds (ETFs), comply with UCITS rules.

These allow a fund following the rules to be sold throughout Europe without needing to register with the regulator in each country. The rules generally mean the fund must invest in assets which can be easily priced, easily sold, and that the fund must spread and not concentrate investments in too small a number of assets.

NURS funds are considered more complex than UCITS funds because they may invest in assets for which it is harder to confirm an accurate price, and which may be more illiquid. NURS funds may also concentrate investments in particular assets, or types of assets, than is permitted in a UCITS fund.

Funds which invest directly in property are likely to be run as NURS because property has more subjective pricing than other types of assets, and can rarely be sold immediately. These features can have a big impact on investors in poor market conditions, even leading to delays to being able to sell their holding and receive back their sales proceeds.

Many multi-asset funds, and those which are run with a risk objective like ‘cautious’ or ‘adventurous’ are also likely to be NURS funds due to the way they manage the investments to meet their goals.

You can choose from funds that are typically simpler and follow UCITS rules with their protections, or benefit from the potentially broader approach that NURS funds may offer, on the understanding that they may be run in a more complex manner. Of course, as part of a diversified investment portfolio you may include both NURS and funds that comply with UCITS rules.

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