Specialist Services > Collective Investment Schemes

Collective Investment Schemes

A collective investment scheme is an arrangement that enables a number of investors to 'pool' their assets and have these professionally managed by an independent manager. Investments may typically include gilts, bonds and quoted equities, but depending on the type of scheme may go wider. For example some investments may be in unquoted investments or property. Investors in such schemes are able to reduce risk by spreading their investments more widely than may have been possible if they were investing in the assets directly. The reduction in risk is achieved because the wide range of investments in a collective investment scheme reduces the effect that any one investment can have on the overall performance of the portfolio.

Isle of Man Collective Investment Schemes
The Isle of Man Financial Services Act 2008 and the Collective Investment Schemes Act 2008 (CIS Act) contain the statutory framework for the regulation of Collective Investment Schemes (also known as Unit Trusts, Mutual Funds or Open-ended Investment Companies).

The CIS provides for the regulation of three classes of Collective Investment Scheme:

• Authorised Collective Investment Schemes
• Recognised Collective Investment Schemes
• International Collective Investment Schemes

Authorised Collective Investment Schemes
Any Collective Investment Scheme established in the Island which is to be promoted to the general public in the Island (or the UK by virtue of the Island's designated territory status) must be authorised by the Finanancial Supervision Commission (FSC) under Schedule 1 of the CIS Act. Authorised Schemes are subject to detailed regulation concerning their structure and operation.

Recognised Collective Investment Schemes
Collective Investment Schemes which are managed in or authorised under the law of another country or territory outside the Island may not be promoted to the general public in the Island unless they have been granted recognition by the Financial Supervision Commission under Schedule 4 of the CIS Act.

International Collective Investment Schemes
Any scheme established in the Isle of Man which is not an Authorised Scheme or an Exempt Scheme, is an International Scheme under Schedule 2 to the CIS Act. International Schemes may not be promoted to the general public in the Isle of Man.
The FSC does not prescribe the types of schemes which can be Full International Schemes. The FSC aims to provide a flexible regulatory framework in which new innovative products, which meet the needs of the market place operators, can be developed. Full international schemes are not subject to any direct approval or authorisation process, however the manager of such a scheme must have the FSC's permission to act, and persons comprising the Governing Body of the scheme must be fit and proper persons.

There are sub categories of International Schemes:

• The Specialist Fund
• The Qualifying Fund
• The Profesional Investor Fund
• The Experienced Investor Fund

Exempt Schemes
Exempt schemes (as defined in Schedule 3 to the CIS Act) are Isle of Man schemes that must have less than 50 investors and their relevant constitutional documents must expressly prohibit the making of an invitation to the public to subscribe in any part of the world. Exempt Schemes are regarded as private arrangements and are not subject to regulation.

Recognised Schemes
Collective Investment Schemes which are managed in or authorised under the law of another country or territory outside the Island may not be promoted to the general public in the Island unless they have been granted recognition by the FSC under Schedule 4 of the CIS Act. Once granted recognition, a Recognised Scheme may be promoted to the general public in the Island.

Schemes established outside the Isle of Man but administered or managed in the Isle of Man
Schemes that are established outside the Isle of Man and administered or managed in the Island are not subject to detailed Isle of Man regulations or approvals in the Isle of Man (but will be subject to the regulatory regime in their home jurisdiction) and investors in such funds are not protected by any Isle of Man statutory compensation arrangements in the event of the fund's failure The FSC does not vouch for the financial soundness of such funds or for the correctness of any statements made or opinions expressed with regard to it. Schemes which were full international schemes, specialist funds, qualifying funds, professional investor funds, experienced investor funds or exempt schemes when the CIS Act came into operation can continue to be such schemes.
 

MORE INFORMATION
Isle of Man Funds
Equiom's Collective Investment Scheme Licence
Real Estate & Property Services

Print page

Tell a friend