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UIFs expand investment capacities

13 December 2021

The Bank of Russia suggests extending the list of indexes from 42 to 79 positions according to which the investment limit of a unit investment fund (UIF) for investments into one person’s assets increases from 13% to 20%. This will expand the investment capacities of UIFs and boost the offering of new products in the market. The Bank of Russia has released the relevant draft ordinance to assess its potential regulatory impact.

The list of eligible investment assets also extends. It will become possible to invest the assets of open-end UIFs in cash-settled derivative contracts whose values depend on the changes in exchange commodity prices. It is also proposed to reduce the minimum portion of liquid assets in open-end UIFs from 5% to 3%. This will enable the asset managers of open-end UIFs experiencing a slight outflow of customers to reallocate the free surplus for investment purposes.

It is permitted to invest the assets of closed-end UIFs established for non-qualified investors in commercial buildings and premises immediately after their commissioning provided they are let under mid-term lease contracts on market conditions. According to the document, the minimum amount for joining closed-end UIFs for non-qualified investors is to be reduced from 300,000 to 100,000 rubles.

However, from now on, it is prohibited to invest the assets of UIFs, including those established exclusively for qualified investors, in digital currencies and financial instruments whose values depend on the digital currencies’ rates of exchange. Earlier, the Bank of Russia recommended refraining from the investment in such assets.

The regulator’s initiatives will not only improve the UIF investment potential but also enhance the protection of investor rights.

Any suggestions and comments on the draft ordinance are welcome until 27 December 2021.

Preview photo: Pixel-Shot / Shutterstock / Fotodom
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