Investment Funds 2024 Comparisons

Investment funds in Brazil are regulated by the CVM under Federal Law No 6,385 of 7 December 1976 (the “Securities Law”) and the Brazilian Civil Code. The CVM is a governmental agency of the Ministry of Economy and is responsible for, inter alia, monitoring the investment funds industry and issuing regulations.

Resolution CVM 175 comprises a general part applicable to all categories of investment funds in Brazil, and contains annexes with specific rules applicable to the different categories of investment funds, such as:

• financial investment funds (FIFs – ie, fixed-income funds, equity funds, multi-market funds and foreign-exchange funds);
• asset-backed securities funds (FIDCs);
• private equity funds (FIPs); and
• real estate funds (FIIs).

Brazilian investment funds are organised as a special condominium – ie, a pool of financial assets jointly owned by the holders of interests in the fund, called “quotas”, under the structure of a co-ownership. The funds can be organised as an open-ended condominium (ie, redemption of quotas allowed during the fund’s term of duration) or a closed-ended condominium (ie, no redemption of quotas is permitted until the end of the fund’s term of duration or in the case of its early liquidation). Alternative funds are generally set up as closed-ended condominiums.

Pursuant to CVM Resolution 175, all funds will be entitled to create different classes of quotas with different economic and political rights, and with segregation of net worth. Subclasses of quotas will also be permitted only with respect to:

• target public;
• terms and conditions for investment, amortisation and redemption; and
• administration, management, maximum distribution, entry and exit fees.

Other economic rights and political rights pertaining to subclasses of restricted classes (ie, those exclusively targeted at qualified and professional investors) may be included in the fund’s by-laws. The possibility of implementing different classes and subclasses of quotas as set forth in CVM Resolution 175 will enter into force on 3 April 2024.

Private Equity Funds (FIPs)

Currently regulated by CVM Resolution 175, FIPs are organised in the form of a closed-ended condominium restricted to qualified investors. FIPs are allowed to invest in shares, debentures, warrants and convertible debt securities issued by listed and unlisted companies. FIPs shall participate in the decision-making process of invested companies and have effective influence in the definition of their strategic polices and management (the “Influence Test”). FIPs are classified into the following categories.

• Seed Capital FIPs are allowed to invest in corporations or limited liability companies with gross revenue of up to BRL20 million in the fiscal year prior to the fund’s investment.
• Emerging Companies FIPs are allowed to invest in corporations with gross revenue of up to BRL400 million in the fiscal year prior to the fund’s investment.
• Infrastructure (FIP-IE) and Intensive Economic Production in Research, Development and Innovation (FIP-PD&I) FIPs are allowed to invest in corporations that develop new infrastructure or intensive economic production in research projects in the energy, transportation, water and sanitation, and irrigation sectors, and in other priority areas as determined by the federal government. Brazilian regulation defines “new projects” as those implemented after 22 January 2007 and expansions of existing or implemented projects, or projects in the process of implementation, provided that the investments and results of the expansion are segregated by means of the formation of a specific purpose company. Such funds shall have at least five quotaholders, each of whom may not hold more than 40% of the quotas issued by the fund nor have the right to earn income exceeding 40% of the total income of the fund.
• Multi-Strategy FIPs are the most common form used in the Brazilian market and may invest in different types and sizes of companies. A Multi-Strategy FIP targeted at professional investors may invest up to 100% of its subscribed capital in foreign assets.

FIPs may have classes of quotas with different economic and/or political rights, subject to the applicable regulation. As of April 2024, different classes of quotas will be entitled to “track” specified assets of the portfolio of the FIP.

Asset-Backed Securities Funds (FIDCs)

FIDCs may be organised as open-ended or closed-ended condominiums. Annex II of CVM Resolution 175 consolidates the rules applicable to FIDCs and FIDC-NPs (non-standard asset-backed securities funds) into a single regulation. CVM Resolution 175 allows non-qualified investors (retail) to subscribe/acquire senior quotas of the standard FIDCs. The subscription of quotas of a FIDC that allows investment in non-standard receivables is restricted to professional investors.

FIDCs may invest in receivables such as credit rights and underlying instruments originating from transactions in the financial, commercial, industrial, real estate, mortgage, leasing and service segments. A FIDC that allows investment in non-standard receivables may also invest in receivables such as litigated claims, government bonds and overdue receivables. FIDCs may have different classes of quotas (senior and subordinated). Senior quotas have priority in the amortisation and redemption of quotas, while the other classes of quotas will be subordinated to the senior quotas for amortisation and redemption. As per Resolution CVM 175, other economic and political rights may be attributed to FIDCs’ classes of quotas.

Real Estate Funds (FIIs)

FIIs are organised in the form of a closed-ended condominium and invest in real estate developments. FIIs may be targeted at general investors (retail) or at qualified investors.

Quotas of FIIs may be divided into series, with the specific purpose of establishing different dates for the payment of the quotas by the holders of each series of quotas. Quotas targeted at qualified investors may be divided into different classes with certain limitations. As of April 2024, quotas of FIIs will be allowed to be divided into different classes with different economic and political rights, and with segregation of net worth.

All Brazilian investment funds must be registered with the CVM, regardless of whether their quotas are subject to a public or private offer, or whether they are open-ended or closed-ended condominiums.

In order to set up alternative investment funds in Brazil, there should be a constitutive act from the administrator and the manager approving the formation of the fund and its by-laws. A minimum set of documents should be filed with the CVM for the registration of the fund, as per the applicable regulation.

CVM Resolution 175 sets forth that the registration of the fund will be granted automatically by the CVM upon filing of the required documents with the CVM through its electronic system.

Currently, the enrolment of the fund on the Federal Revenue Office taxpayer’s register is made concurrently with the registration of the fund with the CVM.

The public placement of quotas requires intermediation by a company pertaining to the so-called Brazilian Securities Distribution System. For closed-ended investment funds, such placement must also be registered with the CVM.

Such registration shall be effected pursuant to the Securities Law and CVM Resolution 160 (which replaced CVM Instruction No 400/2003 and CVM Instruction No 476/2009). Public offerings in Brazil follow the definition found in other jurisdictions – ie, a public offering takes place whenever it is directed to an undetermined group of people. The ordinary registration process with the CVM may take from four to six months on average. Public offerings are also subject to several other requirements, including:

• publication of a prospectus with respect to the offering of quotas to retail and qualified investors (not applicable to offerings to professional investors);
• publication of offering announcements;
• the payment of a supervisory fee to the CVM; and
• adherence to conduct rules under CVM Resolution 160 (such as silence period rules, and full and proper disclosure).

The placement of quotas of closed-ended investment funds targeted at qualified and professional investors is subject to an automatic offering registration process with the CVM, pursuant to CVM Resolution 160. In such cases, there are no limitations with respect to the maximum number of investors to be assessed. A lock-up period may apply if the quotas of the investment fund subject to an automatic offering registration process with the CVM are subsequently traded to a different category of investors (eg, in the case of a fund/class of quotas targeted only at professional investors, no lock-up period will apply if they are traded to other professional investors; but a 180-day lock-up period will apply if they are traded to qualified investors and a 12-month lock-up period will apply if they are traded to retail investors).

Liability is limited to the value of the quotas held by each investor, provided that such limitation is expressly provided in the fund’s by-laws. Otherwise, quotaholders will be liable for any negative equity of the fund, meaning they could be called to invest more in the fund than their original committed capital.

Considering that the quotaholders’ liability shall be disciplined in the annexes of each class of quotas (as part of the fund’s by-laws), it is possible for the same fund to create different classes of quotas with unlimited and limited liability.

CVM Resolution 175 has a chapter dedicated to the procedures to be observed by administrators and managers upon the verification that the net equity of a class of quotas with limited liability is negative.

Pursuant to CVM regulations, investment funds must disclose a variety of information to the CVM, the market or the quotaholders.

Any disclosure of information to quotaholders must be comprehensive, equitable and simultaneous, and the following materials must be made available on electronic channels and on the website of the administrator, the distributor (while the distribution is in progress) and, if applicable, the managing entity of the organised market where the quotas are admitted for trading:

• the updated fund’s by-laws;
• an updated essential information sheet (lâmina), if any;
• the performance history;
• the voting policy; and
• a description of the applicable taxation.

Any marketing materials and other information provided to investors in public offerings must be:

• true, complete, consistent and not misleading;
• written in simple, clear, objective and concise language; and
• useful for investment evaluation.

The information cannot guarantee or suggest the existence of a guarantee of future results or risk exemption for the investor. Factual information must be accompanied by an indication of sources and differentiated from interpretations, opinions, projections and estimates.

The administrator of the fund is responsible for disclosing the following:

• the value per quota and the net worth of the open-ended funds (daily or at a frequency compatible with the liquidity of the fund);
• a statement containing information on the fund and the quotaholder (monthly or at other intervals as provided in the fund’s by-laws) to each quotaholder, including the balance and value of the quotas at the beginning and the end of the period;
• general information about the fund, including regarding the portfolio; and
• the performance statement of the fund, pursuant to the requirement of CVM regulations.

The administrator should also submit other documents to the CVM and, where applicable, to quotaholders and to the organised market where the quotas are admitted for trading, such as:

• daily and monthly newsletters;
• quarterly and biannual statements regarding the portfolio composition and diversification;
• the annual accounting statements accompanied by the independent auditor’s opinion; and
• a standard form with basic information about the fund, whenever there is an amendment to the by-laws.

Where the quotas are admitted for trading, the administrator should also immediately disclose to the quotaholders, the CVM and the organised market any relevant act or fact that occurred or is related to the functioning of the fund or the assets that are part of the portfolio, which might reasonably influence the value of the quotas or the decision of the investors to acquire, sell or keep such quotas.

The following investors have been active in alternative investments:

• institutional investors, notably development banks, other financial institutions and pension funds;
• foreign investors, including sovereign funds and private equity funds of funds;
• family offices; and
• high net worth individuals (qualified or professional investors).

Please see 2.1.1 Fund Structures for the legal structures typically used by alternative fund managers in Brazil.

According to Brazilian law, investment funds shall generally have a fiduciary administrator (principal fund “gatekeeper”) and an asset manager (responsible for the investment and divestment decisions, subject to the limitations set out in the fund’s by-laws), both of which are duly authorised by the CVM to provide securities portfolio-management services.

The fiduciary administrator shall be a legal entity, while asset managers may be either an individual or a legal entity (for FIPs, the manager shall be a legal entity in any event). In addition, entities may be registered as “full administrators”, which means they can act as both fiduciary administrator and asset manager, provided they comply with the Chinese wall requirements.

CVM Resolution No 21 of 25 February 2021 sets forth the minimum criteria applicable to fiduciary administrators and asset managers, including that they must be domiciled or have their headquarters in Brazil.

FIIs may be administered by:

• commercial banks;
• multiple banks with investment portfolios or real estate loan portfolios;
• investment banks;
• brokerage companies or securities dealerships;
• real estate credit companies;
• savings banks; or
• mortgage companies.

Investors are divided into three categories in Brazil:

• professional investors;
• qualified investors; and
• non-qualified investors.

According to current CVM regulation, FIPs and FIDCs are restricted to qualified investors, while FIIs can also be marketed to non-qualified investors (ie, retail investors). As mentioned in 2.1.1 Fund Structures, CVM Resolution 175 allows senior quotas of FIDCs to be targeted at non-qualified investors.

CVM Resolution No 30/2021 sets forth the criteria for qualified investors (including individuals or legal entities that hold financial investments in an aggregate amount exceeding BRL1 million) and professional investors (including individuals or legal entities that hold financial investments in an aggregate amount exceeding BRL10 million and non-resident investors).

Non-professional or non-qualified investors are considered retail investors.

For more information on the regulatory regime applying to alternative funds in Brazil, please see 2.1.1 Fund Structures.

ANBIMA (a private and voluntary self-regulatory association) establishes rules for the market regarding enforcement and control, as well as codes of best practice for its members (which include asset managers, banks, brokers, securities dealers and investment advisers). It monitors the application of such codes and issues penalties for non-compliance.

Brazilian regulations set forth rules regarding the composition of the portfolio of alternative funds and certain limitations, as summarised below.

FIPs

A FIP must maintain at least 90% of its net assets invested in securities (the “90% Rule”), which will not apply during the term set forth in the regulations for the FIP to consummate an investment after a capital call. For purposes of the 90% Rule, the regulations set forth that amounts may be added to the net assets invested in securities, such as amounts for the payment of the FIP’s expenses (limited to 5% of the committed capital), funds deriving from a divestment (subject to certain conditions), etc.

If the issuer of the securities targeted by the FIP is a privately held company, certain governance requirements must be observed by such issuer.

There is no maximum or minimum number of companies in which a FIP may invest, nor is there a maximum or minimum percentage of shares (ie, equity interest) that a FIP must hold in an invested company, provided in any case that the Influence Test is met and subject to certain concentration limits.

FIPs may invest up to:

• 33% of their subscribed capital in foreign assets (securities), unless the fund is targeted at professional investors, in which case the FIP may invest up to 100% of its subscribed capital in foreign assets; and
• 33% of their subscribed capital in non-convertible debentures or other non-convertible debt instruments, except for FIP-IEs, which may invest up to 100% in such debt instruments.

FIPs may invest in quotas of other FIPs or of equity funds. FIPs may not invest in credit rights – except those issued by invested companies of the fund.

FIDCs

FIDCs may acquire credit rights and other assets of the same debtor, or a co-obligation of the same debtor, within the limit of 20% of its net equity. This limit may not be applied if the fund is targeted at professional investors. The limit may also be increased if certain requirements are met (eg, the debtor is a publicly-held company or has financial statements audited by an independent auditor registered with the CVM). The fund may acquire credit rights originated or assigned by the administrator, manager, custodian or specialised consultant, or by parties related to them in certain situations, namely:

• when the manager, registering entity and custodian of the credit rights are not related parties between themselves, and, cumulatively, the registrar and the custodian are not parties related to the originator or assignor; and
• in the case of classes of quotas intended exclusively for professional investors.

Other rules regarding the composition of the portfolio and limitation on investment by issuer and by type of investment can also be included in the fund’s by-laws.

FIIs

The properties, assets and use rights to be acquired by FIIs must be subject to prior evaluation by the administrator, the manager or an independent third party, subject to the requirements set out in the regulations. FIIs that invest predominantly in securities must respect the limits of application by issuer and by type of financial assets established in the general rules on investment funds. Such limits do not apply to investments by FIIs in quotas of FIPs, FIIs, certificates of real estate receivables and quotas of FIDCs.

FIIs can maintain a portion of their assets permanently invested in investment funds or fixed-income securities, public or private, to meet liquidity needs.

The main service providers, such as the fiduciary administrators, asset managers, custodians and bookkeepers, have to be established in Brazil and be duly authorised by the CVM (with the exceptions applicable to FIIs) or by a recognised local authority.

Administrators and portfolio asset managers must comply with the requirements of CVM Resolution 21, as explained in 2.2.2 Legal Structures Used by Fund Managers.

Please see 2.3.2 Requirements for Non-local Service Providers.

Please see 2.1.2 Common Process for Setting Up Investment Funds.

Conduct rules set forth in CVM Resolution 160 apply, specifically silence period rules, which set forth that the offer participants are expressly prohibited from publicising the public offering, including through statements regarding the fund, in the following periods:

• beginning at the moment in which the public offer was approved by means of a deliberative act, or on the 30th day prior to the filing of the request for registration of the offer with the CVM, whichever is earlier; and
• ending on the date of announcement of the closing of the public offering (quiet period).

The marketing and distribution of quotas of investment funds in Brazil are made by members of the Distribution System.

Under the applicable regulation, the asset manager may act as the distributor of quotas of the funds under its investment management or administration, subject to the adoption of certain procedures and policies applicable to distributors.

All marketing materials of investment funds must:

• be clear and concise;
• contain specific disclaimers and information regarding the fund’s by-laws; and
• alert the investors of the investment risks.

Conduct rules set forth in CVM Resolution 160 also apply (such as silence period rules, full and proper disclosure, etc).

In the case of open-ended investment funds targeted at retail investors, the administrator must prepare an essential information sheet, including information such as:

• target investors;
• the fund’s purpose;
• the investment policy;
• risks; and
• profitability.

Please see 2.2.3 Restrictions on Investors for more information on the investors to whom alternative funds can be marketed in Brazil.

Notification is required only after the use of marketing material as permitted under CVM Resolution 160, which shall be sent to the CVM within one business day after its use.

During the period between the beginning of the quiet period (as indicated in 2.3.5 Rules Concerning Pre-marketing of Alternative Funds) and the date of disclosure of the notice to the market, the offer participants must limit the disclosure and use of information regarding the public offer strictly to the purposes related to the preparation of the public offering, warning recipients about the reserved nature of the information transmitted.

After the beginning of the market-offering period, the offering participants may widely publicise the public offering, provided that the conditions set forth in CVM Resolution 160 are observed, including by means of disseminating:

• the prospectus and offer sheet;
• material of an explanatory and educational nature that contains useful and relevant aspects;
• marketing material;
• presentations to investors, including supporting documents for such presentations; and
• media interviews.

The permitted communications must:

• be consistent with the content of the prospectus and the issuer’s periodic information required by the legislation in force;
• use calm and moderate language; and
• observe the principles of quality, transparency and equity of access to information.

The permitted communications must refrain from:

• using language that omits or does not adequately reflect the existence of risks;
• containing statements that remove the responsibility of the offeror and the institutions participating in the distribution consortium regarding the information provided;
• stating that it is not a public offer;
• stating that the information contained in the communication is confidential;
• containing language of a contractual nature that implies a perception of tacit consent to a reservation or placing an order; and
• using information that is false or inaccurate, or that misleads the investor.

Please see 2.2.3 Restrictions on Investors for more information on the restrictions relating to certain categories of investors in certain types of alternative investment funds.

The administrator and the manager of an investment fund have fiduciary duties towards the fund and its quotaholders, and shall be liable for any damages caused to the quotaholders in the case of non-compliance with the fund’s by-laws or the applicable laws and regulations.

The CVM may apply penalties to service providers for any violation of the fund’s by-laws or the applicable laws and regulations – including fines, suspension of authorisation or registration for the exercise of the administration and/or management activities, or temporary disqualification to carry out such activities, up to a maximum of 20 years.

The CVM usually responds to day-to-day questions by email within a reasonable timeframe, and is also open to virtual or face-to-face meetings, which may be requested online through the CVM’s website. Complex queries should be submitted to the CVM by means of a formal consultation, which may take longer for the CVM to respond to. Filings of registration processes are all done electronically through the CVM’s website.

Brazilian retail funds are also organised as condominiums (pools of assets) and can be organised as closed-ended or open-ended funds, as mentioned in 2.1.1 Fund Structures.

Retail funds are regulated mainly by CVM Resolution 175’s Normative Annex I (called FIFs), and are classified as follows.

• Fixed-income fund: the main risk factor for the portfolio of such fund must be the variation of the interest rate or of the price index, or both. Such funds must have at least 80% of their portfolio in assets directly related, or synthesised via derivatives, to the risk factor that names this class of funds. In this category of funds, there is also the incentivised infrastructure fund aimed at investing in infrastructure assets with an incentivised tax treatment pursuant to Federal Law No 12,431/2011.
• Equity fund: the main risk factor for the portfolio of such fund must be the variation of the prices of shares admitted for trading in the organised market. At least 67% of the equity fund’s net worth must be represented by:
1. shares admitted for trading in the organised market;
2. warrants or subscription receipts and depositary certificates of shares admitted for trading in the organised market;
3. equity fund quotas and quotas of share-based index funds; and
4. Brazilian Depositary Receipts (BDRs), classified as level II and III (BDR-Shares and BDR-ETF Shares).
• Foreign-exchange fund: the main portfolio risk factor for such fund must be the variation of foreign currency prices or the variation of the exchange rate coupon. Such funds must have at least 80% of their portfolio assets directly related, or synthesised via derivatives, to the risk factor that names this category of funds.
• Multi-market fund: such fund must have investment policies involving several risk factors, without the commitment to concentrate on any particular factor.

In addition, Normative Annex V of CVM Resolution 175 regulates exchange-traded funds (ETFs), which are retail funds formed as open-ended funds. ETFs’ quotas are required to be admitted for trading in stock exchanges or organised markets. Brazilian-formed ETFs may be backed by variable-income and fixed indexes, and at least 95% of their net equity must be invested in:

• financial assets composing the index;
• liquidity positions in future contracts, which shall be traded on a commodities and futures exchange, and settled in clearing and settlement chambers and service providers that assume the position of central counterparty; and
• quotas of other index funds that aim to reflect the variations and profitability of the investor ETF’s benchmark index.

The process for setting up the common structures used for retail funds in Brazil is similar to the process for alternative investment funds; please see 2.1.2 Common Process for Setting Up Investment Funds.

Retail funds are automatically registered with the CVM as of the filing of the requested set of documents.

The rules regarding the limited liability of retail fund investors are the same as for alternative investment fund investors; please see 2.1.3 Limited Liability.

The disclosure requirements for retail funds are the same as provided for alternative investment funds; please see 2.1.4 Disclosure Requirements.

Please see 1.1 State of the Market and 2.2.1 Types of Investors in Alternative Funds.

Please see 3.1.1 Fund Structures for more information on the legal structures used by retail fund managers in Brazil.

There is no legal requirement regarding the type of investor to which retail funds can be marketed in Brazil.

Please see 3.1.1 Fund Structures for more information on the regulatory regime applicable to retail funds.

Limitations on the Composition of the Portfolio

A retail fund must invest its equity in financial assets that are registered in a registration system, or that are the object of custody or a central deposit, in all cases with institutions duly authorised to perform such activities by the Central Bank of Brazil or by the CVM. This is not applicable to quotas of open-ended investment funds duly registered with the CVM. A retail fund may not invest in quotas of funds that hold an interest in such retail fund.

Foreign Assets

FIFs are subject to the following concentration limits when investing in financial assets abroad.

• There are no limits for:
1. funds (or classes of quota pursuant to CVM Resolution 175) classified as “Fixed Income – External Debt”; and
2. funds (or classes of quota pursuant to CVM Resolution 175) exclusively targeted at professional investors.
• Up to 40% of net equity for funds exclusively targeted at qualified investors.
• Up to 20% of net equity for funds targeted at the general public.
• Investment is prohibited for fixed-income funds classified as “simple” (ie, those with 95% of the net equity invested in federal public debt securities, or fixed-income securities issued by financial institutions/operations backed by federal public debt securities or by securities issued by authorised institutions).

Under CVM Resolution 175, the limits applicable to classes of quotas targeted at qualified investors may be exceeded if certain requirement are met.

Limits per Issuer

The concentration limits per issuer for FIFs are as follows, according to the general rules:

• up to 20% of the fund’s net equity when the issuer is a financial institution authorised to operate by the Central Bank of Brazil;
• up to 10% of the fund’s net equity when the issuer is a publicly held company;
• up to 5% of the fund’s net equity when the issuer is a natural person or a legal entity under private law that is not a publicly held company or financial institution authorised to operate by the Central Bank of Brazil; and
• no limits when the issuer is the Federal Union or an investment fund, or when the investment policy provides for the acquisition of assets of a single securities issuance.

CVM Resolution 175 also sets forth that there will be no limits per issuer when the issuer is an investment fund and the investment policy provides for the acquisition of fungible assets from a single issue of securities.

Limits by Type of Financial Asset

The concentration limits per type of financial asset for retail funds are as follows, according to the general rules.

• Up to 20% of the fund’s net equity, for the following assets:
1. FIFs’ quotas targeted at qualified investors, of which 5% may be directed at FIFs’ quotas targeted exclusively at professional investors;
2. quotas of FIIs;
3. quotas of FIDCs, of which 5% may be directed at FIDCs investing in non-standard credit rights;
4. Certificates of Real Estate Receivables (CRIs); and
5. securities issued by privately held companies.
• Up to 15% of the fund’s net equity, for the following assets:
1. FIP’s quotas; and
2. quotas of agro-industrial investment funds (FIAGROs).
• Up to 10% of the fund’s net equity, for the following assets:
1. collective investment bonds and contracts;
2. crypto-assets, carbon credits and CBIO;
3. securities issued through electronic participatory investment platforms, as long as they are subject to bookkeeping carried out by a bookkeeper authorised by the CVM; and
4. other financial assets not provided for above.

There is no concentration limit per type of financial asset for investment in:

• federal public securities and repo operations backed by these securities;
• gold, provided it is negotiated in an organised market;
• the issuance or co-obligation securities of a financial institution authorised to operate by the Central Bank of Brazil;
• promissory notes, debentures and shares, provided they have been issued by publicly held companies and subject to a public offering;
• FIFs targeted at the public in general
• ETFs, BDR-shares, BDR-corporate debt and BDR-ETF;
• derivative contracts, unless referenced to the assets listed above; and
• assets, perfectly fungible from a single issue of securities, provided that this specific application constitutes the investment policy of the class, and the assets have been issued by publicly held companies and are the subject of a public offering.

FIFs targeted at professional investors are exempted from the concentration limits. FIFs targeted at qualified investors may increase the percentage of the concentration limits.

For ETFs that seek to reflect the variations and profitability of fixed-income indexes (ie, fixed-income ETFs), financial assets that are not part of the benchmark index but are of the same nature as those with different issuances will be admitted, limited to 20% of the ETF’s net equity.

Please see 2.3.2 Requirements for Non-local Service Providers.

Please see 2.3.2 Requirements for Non-local Service Providers.

Please see 3.1.2 Common Process for Setting Up Investment Funds.

Please see 2.3.5 Rules Concerning Pre-marketing of Alternative Funds.

Please see 2.3.6 Rules Concerning Marketing of Alternative Funds.

Please see 3.2.3 Restrictions on Investors.

Please see 2.3.8 Marketing Authorisation/Notification Process.

Please see 2.3.9 Post-marketing Ongoing Requirements.

Please see 3.2.3 Restrictions on Investors and 2.3.10 Investor Protection Rules.

Please see 2.3.11 Approach of the Regulator.