Leap of Faith: Launching the First Maltese Unit Trust

The Maltese funds industry has just seen the launch of its first collective investment scheme structured as a unit trust. In this paper, the author examines some of the legal and regulatory challenges which the launch of this structures gave rise to, such as the question of the role of the custodian. The author suggests a number of changes to the regime which are necessary if the structure is to become more widely used and highlights some of the advantages of the unit trust as a vehicle for funds.

While the unit trust is commonly used as a vehicle for collective investment schemes (CIS) throughout the world, particularly in common law jurisdictions, the unit trust structure is very much unfamiliar in the context of the local funds industry.  Although structuring CISs in the form of unit trusts is permissible under local legislation and a regime regulating such CISs does exist, until recently no such funds had been launched in Malta, and so far local funds have been almost invariably structured as SICAVs. However, the situation has now changed as the regulatory process leading to the licensing and launch of the first Maltese Professional Investor Fund (PIF) structured as a unit trust has just been completed.