Collective Investment Fund is an investment vehicle where a group of investors pool their money and invest in a portfolio of assets to spread risk. The Dubai Financial Services Authority has notified that modifications to its Collective Investments Funds (CIF) regime, on which the Dubai Financial Services Authority (DFSA) approached last year, came into force on 18th December 2018 coexisting with the ratification of the Dubai International Financial Centre (DIFC) Companies Law 2018. The DFSA set out the wide range of proposals to assist the continued enlargement of the growing funds' industry in the DIFC.
The recent provisions bolster the DFSA's dedication to meeting international standards, especially those of the International Organization of Securities Commissions and Financial Stability board, through certain ways to intensify liquidity risk management in open-ended Funds. Open-ended Funds provides their investors the right to redeem their units at a calculated price which is based on the asset value of the Fund's portfolio of assets.
The latest provisions include the difference between Private Company and Public Company established by the Companies Law, into the Funds regime, so that investment companies with retail participants would need to be Public Companies; detach the current limits on the investors which a DIFC Fund can have. At present only, the Public Fund can have around 100 investors which also include retail investors, with an Exempt Fund being restricted to 100 or less than 100 and Qualified Investor Fund being restricted to 50 or less than 50 investors.
These amendments do not reform the present focus of regulations of these Funds, which would be based on the class of investors. For example, retail investors will sustain the higher level of inspection regardless of the category of Fund). The new provisions also instigate a new category of specialist funds for ETFs. ETF are those funds whose units are listed and traded on exchanges. The introduction of ETF would provide the investors with a wide range of choices from the DIFC. This model has been observed from EU (European Union)and incorporated into DIFC regime with necessary changes.
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