A global asset manager turned to Zeidler Group for specialist regulatory guidance after seeking to invest in structured debt instruments issued by a Luxembourg special purpose vehicle (SPV) under a secured note issuance programme.
The manager’s strategy aimed to enhance portfolio performance, but the complexity of the structured notes meant they needed an expert. The client required a thorough legal and regulatory analysis to determine whether the proposed investment could be classified as a permissible asset for UCITS purposes.
Assessing UCITS eligibility for structured instruments is rarely straightforward. Article 50 of Directive 2009/65/EC and the Eligible Assets Directive (2007/16/EC) impose precise limitations on permissible investments, and eligibility must be evaluated on a case-by-case basis rather than through any standardised approach. Without specialist support, asset managers often exclude complex instruments altogether.
Zeidler Group responded with a multi-layered eligibility assessment tailored to the client’s specific investment. This included a detailed legal review of the structured notes against the relevant UCITS and Eligible Assets Directive provisions, an instrument-level analysis of the SPV structure, the note issuance programme and the embedded derivative components, and a risk-based assessment designed to support informed decision-making beyond pure legal classification.
The outcome gave the client clarity on the UCITS eligibility of a complex structured investment, along with the regulatory confidence to consider non-standard asset classes that might otherwise have been set aside.
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