Nurs status upgraded to rival Ucits

Unlike Ucits III funds, which can be marketed into Europe, Nurs funds can be sold only to British investors. However, they are widely recognised as having more investment flexibility than Ucits funds. For example, Nurs-structured funds can invest in real property whereas Ucits funds cannot.

As a result, it is now predicted the multi-manager sector will polarise between those that have adopted Ucits III status and those that may go down the Nurs route.

Toby Hogbin, head of product development at Credit Suisse Asset Management, says the lack of an effective date for Isa status means it will not be converting its fund of funds range to Nurs just yet. One reason CSAM has not converted its fund of funds to Ucits III is that the scheme limits groups to holding a maximum 25% exposure in one underlying fund across their entire umbrella of funds. Under Nurs, there are no such restrictions.

Hogbin adds that last week’s Budget announcement may be the catalyst for a number of groups launching Nurs products: “If a group wants to launch a fund just for the UK market, Nurs offers greater investment flexibility than Ucits III funds to meet investor needs. If they launch the product now, they can spend time building its track record and then sell it to Isa investors as when the government gives the nod.”

Groups that have already launched Nurs funds include Morley Fund Managers, Insight and Gartmore. At the start of December the Morley Property trust adopted Nurs status and immediately increased its exposure to direct property investments to 85-90%. Before doing so, it was limited to holding just 80% in the asset class.

While welcoming the move to make Nurs eligible for Isa and CTF investments, Ros Clarke, technical adviser at the Investment Management Association, says she is disappointed by next year’s deadline: “A number of our members want Isa status now for their Nurs funds.”