A fund is a specialized vehicle having as main activity investment of fund in securities, real estate or derivatives with the aim of spreading investment risk and giving the members the benefit of managing their placement.
Funds set up in Mauritius are commonly set up through a Category 1 Global Business Company (“GBC1”), trust or any other legal form as may be approved by the Financial Services Commission.
A fund can take the form of:
- A Closed-Ended Fund (“CEF”) with a fixed capital contribution where investors do not have the right to call for their shares to be redeemed at net asset value. CEF can be listed on the stock exchange enabling investors to buy and sell shares in the market thereby preventing any lock in. CEF may be formed with a limited life after which the assets are distributed to investors on winding.
- An Open-Ended Fund (“OEF”) with a variable capital contribution where investors are allowed to redeem their shares at net asset value at pre-determined times in accordance with the constitution or any other agreement.
Governed by the Securities Act 2005, OEF are usually called the Collectives Investment Scheme (“CIS”) and can be categorized as:
- Fully regulated CIS;
- Regulated Global CIS;
- Professional CIS;
- Specialised CIS; and
- Expert Funds.
It is also possible to constitute an umbrella fund under each of the foregoing categories. The umbrella fund may comprise of two or more sub funds where each investors may subscribe for shares and units in a specific sub fund. Each sub fund may have its own investment policy with segregated assets and accounting records. Investors may switch their investment from one sub fund to another without redeeming their shares or units.
