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The EU has updated its main framework for retail investment funds through what is often called UCITS VI. This update, introduced by Directive (EU) 2024/927, brings the UCITS rules closer to those that already apply to alternative funds under AIFMD. The changes mainly focus on how funds are managed, how risks are handled, and how information is reported to regulators. Most of the new rules will apply by early 2026, with additional reporting requirements starting in 2027.
The changes are not a complete overhaul of the system, but they will still have a noticeable impact on how funds operate and how investors understand them.
One of the main areas of focus is governance. Fund management companies will need to clearly explain how they delegate tasks and who is responsible for what. They must show that they have enough staff and resources within the EU to properly run the business. At least two full-time employees based in the EU must be actively involved in managing the company. Firms will also need to describe their systems and resources in more detail, including how they meet sustainability-related rules. While some countries already apply similar standards, these requirements will now be consistent across the EU. For investors, this reduces the risk of firms existing only on paper without real oversight.
Another important change is reporting. From 2027, fund managers will have to provide detailed and standardized information to regulators. This includes what assets they invest in, how they manage liquidity, their risk levels, and the results of stress tests. While this means more work and better systems for fund managers, it should lead to greater transparency and stronger supervision overall.
Liquidity management is likely to be one of the most visible changes in practice. Funds will need to choose at least two tools to manage situations where many investors want to withdraw their money at the same time. They must also clearly define how and when these tools can be used. In some cases, managers will be able to act more quickly during market stress without waiting for prior approval, although they will still need to inform regulators. For investors, this offers better protection during difficult market conditions, but it also means they should pay closer attention to how these tools work.
There are also possible changes on what assets funds are allowed to hold. ESMA has suggested new rules that would require funds to look through most of their investments to ensure they meet UCITS eligibility standards. A small portion, up to 10 percent, could still be invested in assets that do not fully meet these rules, but only under strict conditions. If these proposals are adopted, some funds may need to adjust their investment strategies.
The role of depositaries is also being strengthened. They will face stricter responsibilities when it comes to safeguarding assets and overseeing fund operations. In addition, structures such as white-label platforms will be examined more closely to ensure that fund managers are genuinely in control and not just acting as placeholders.
Another area of focus is how funds are presented to investors. Fund names will now be treated as important pre-contractual information, meaning they must be clear, accurate, and not misleading. This is particularly relevant for funds making sustainability or ESG-related claims, where regulators are increasing scrutiny.
The new rules came into force in March 2024, and EU countries are expected to apply them by April 2026. Reporting requirements will follow in 2027. Since implementation may vary between countries, firms operating across borders will need to plan carefully.