A UCITS fund can NOT invest directly in which of the following?

• A. Corporate bonds
• B. Property
• C. Other UCITS funds
• D. Shares in general insurance companies

Answer: (B)

UCITS funds are restricted to assets that are highly liquid, easily valuated, and transferable, so they can meet daily dealing and redemption needs. Real estate, or property, is illiquid and valuation can be inconsistent, which would make it hard for a UCITS to manage liquidity and price transparency for investors. Because of this, a UCITS cannot invest directly in property. Exposure to real estate can be gained indirectly through listed property companies or property-focused funds that are themselves traded like securities, which aligns with UCITS rules. In contrast, corporate bonds and shares in general insurance companies are standard transferable securities, and investing in other UCITS funds is permitted within regulatory limits.