Funds management: Unit holders versus Shareholders

[Budhardt]

Hey, everyone! Long-time reader, first time writer.
It’s not from the curriculum, but valid for fund management.
I would really appreciate if somebody could explain the difference between being a unitholder and a shareholder when it comes to investing into funds. Also, structures where funds’ owners receive units is said to be Tax Transparent. What does this mean? (probably, the question is more relevant to the European law)…
Thank you in advance! And thanks to everyone who’s ever posted on these forums, because this all helped me to prepare for the exams.

 

[gringo_bob]

I think it just depends on the fund structure. So an opened ended mutual fund like an SICAV will issue units and investors buy and sell units from the Manager whereas ETFs have shares.
I’ve only ever heard about tax transparency in relation to German investors investing into pooled funds and I think it just means that any tax data required by BaFin can be made available. Probably something to do with the split between returns from income and from capital gains so the investor is paying the appropriate tax, or with the German split rate tax system, passing it all off as income!

 

[Budhardt]

gringo_bob
, thank you very much for the answer! Particularly, for the tax transparency part. In fact, SICAVs are corporate bodies, meaning that owners receive shares and are called shareholders. FCPs represent a contractual form of legal stucture and owners get shares….

 

[gringo_bob]

ah ok, I didn’t know that. I suppose then it’s just a teminology thing when talking about funds people call them units even if its an open ended company.