|An Alternative Investment Fund is an investment fund domiciled in the EU or EEA under the Alternative Investment Fund Managers Directive (AIFMD). In compliance with the Directive, all AIFs in Europe must appoint an AIFM. Shares in AIFs can only be held by professional investors. In general, AIFs can be invested in all kinds of assets.
|The European Alternative Investment Fund Managers Directive regulates the managers of Alternative Investment Funds (AIF). Every investment fund that does not qualify as a UCITS is by definition an AIF and must, in general, appoint an AIFM.
|An Alternative Investment Fund Manager (AIFM) is an entity responsible for the portfolio management and risk management of an AIF. The AIFM can also take on numerous other functions for the AIF (e.g. administration, domiciliation, corporate secretary, etc.). Should the AIFM delegate portfolio management to a third party, then the AIFM comes very close to the concept of a management company in terms of its operational duties.
|The Federal Act on Collective Investment Schemes (CISA) provides a legal framework for the approval of investment funds in Switzerland. The purpose of the CISA is to protect investors and ensure transparency and the smooth functioning of the collective capital investments market.
|Luxembourg‘s financial supervisory authority (in French the Commission de Surveillance du Secteur Financier) is responsible, among other things, for supervising investment funds and involved parties.
|Depositary Bank (Verwahrstelle)
|Known in Switzerland as a Depotbank or the Custodian, a Depositary Bank is an entity that is independent from the
IFM, respectively the fund management company and acts in the interests of investors, carrying out certain technical processing, the safekeeping of assets as well as various control functions. It is usually a bank that takes on the role of a depositary. If an investment fund, usually an AIF, invests in assets that cannot be held in custody (e.g. real estate, private equity, private debt, etc.), non-banks are also authorised to function as depositaries.
|The Financial Market Supervisory Authority (FINMA) is Switzerland‘s supervisory authority and responsible, among other things, for supervising investment funds and involved parties.
|The Financial Market Authority (FMA) is Liechtenstein‘s supervisory authority and responsible, among other things, for supervising investment funds and involved parties.
|Fondsleitung (Fund management company)
|In Switzerland a Fondsleitung, or fund management company, is a company that manages investment funds in accordance with Swiss law.
|In general, a Fonds Commun de Placement (FCP) is the name given to investment funds that are not set up in the form of a company, but as contractually regulated collective ownership. It is crucial that investment funds set up as FCPs are not liable for the obligations of the governing body or shareholders. Depending on the jurisdiction, the majority of investment funds are designed as FCPs or SICAVs.
|Management company (Verwaltungsgesellschaft)
|A management company is an entity responsible for the portfolio management, administration and marketing of a traditional investment fund (UCITS or Swiss Investment Fund). Portfolio management and the marketing of investment funds are generally delegated to authorised third parties, who are monitored by the management company.
|The Markets in Financial Instruments Directive (MiFID) is the European Union‘s directive aimed at harmonising financial markets in the European Single Market. The purpose of the Directive is to improve the protection of investors, increase the transparency of financial markets and to ensure the highest integrity of financial services. It deals with many different topics, including rules of conduct, organisational obligations, best execution, possible conflicts of interest, the requirements for the operation of regulated markets and trading platforms, systematic internalisation and the requirements for pre- and post-trade transparency.
|Professional Investor (EU)
|A professional investor is any investor considered a professional client under Appendix II of Directive 2014/65 / EU (MiFID II) or who, upon application, can be treated as a professional client. These typically include financial institutions, investment firms, insurance companies, institutional investors, large corporations as well as – upon request – High-Net-Worth clients.
|Qualified Investor (CH)
|A qualified investor is any investor considered a professional client under the Swiss Financial Services Act (FINSA). Banks, asset management companies, investment firms, insurance companies, large corporations as well as – upon request – High-Net-Worth clients fall under this definition. Qualified investors include retail clients for whom a
financial intermediary provides portfolio management or investment advice within the scope of a permanent portfolio management or investment advice relationship.
|In Switzerland, a Representative is an entity that acts as a contact point for investors and authorities with regard to foreign investment funds available to qualified investors and/or private investors.
|Retail investors are investors that are neither professional investors (EU) nor qualified investors (CH).
|A Reserved Alternative Investment Fund (RAIF) is an investment fund domiciled in Luxembourg in accordance with the RAIF law. It is essentially an AIF, which must appoint a regulated AIFM. In order to ensure the quickest time to market as possible, this type of fund can be launched without approval from the CSSF. Since the RAIF Law was introduced in 2016 many AIFs now have been structured as RAIFs because of this advantage.
|SICAV (in French, the Société d‘Investissement à Capital Variable) is a company structure with both a governing body and a minimum capital requirement. SICAV can be divided into sub-funds, following different investment strategies independent of one another in terms of liability law. SICAV, in the form of a public limited company, acts mainly through its board of directors, who are responsible for the appointment and monitoring of fund providers.
|Undertakings for Collective Investments in Transferable Securities (UCITS) are investment funds that are domiciled in the EU or EEA under the European UCITS Directive. All types of investors, including private investors, can invest in investment funds governed by the UCITS Directive. This is also accompanied by strict regulations when it comes to the acquisition of financial instruments for a UCITS and their diversification.