The FCA FUND sourcebook — the UK AIFM operating rulebook
FUND is the FCA Handbook sourcebook that sets the operating conditions for a full-scope UK alternative investment fund manager — the UK's onshored version of the AIFMD and its Level 2 detail. It is where the manager-level obligations live: transparency and Annex IV reporting to the FCA, the annual report, leverage and liquidity risk management, delegation, the depositary regime, valuation, and how funds are marketed into the UK. If the AIFMD was the EU directive, FUND is the UK's copy of the rulebook that implements it — kept almost verbatim at Brexit, then edited in place. Its most-consulted corner for anyone outside the UK is FUND 10.5, the National Private Placement Regime that governs marketing a non-UK AIF to UK investors.
Scope and where it sits
FUND applies to a full-scope UK AIFM — a manager the FCA has authorised under the UK's onshored AIFM regime (the rules the UK carried over domestically when it left the EU's AIFMD passport at Brexit). FUND 1.3 sorts managers into full-scope, small authorised and small registered UK AIFMs, and FUND 1.4 sets the business restrictions that come with each. The substance is in FUND 3, the operating conditions — the UK analogue of the AIFMD Level 2 Delegated Regulation. FUND deliberately does not repeat the product rules for authorised retail funds: those live in COLL, and FUND 1.1 spells out the FUND/COLL split. Remuneration for AIFM staff is cross-referred into SYSC, not restated here. What you get in FUND is the manager's rulebook: what it must disclose, report, control and safeguard, and how it may market.
Key provisions
| Area (FUND section) | What it requires | The practical point |
|---|---|---|
| Investor information (FUND 3.2) | Pre-investment disclosure to investors before they invest, plus the newer sustainability-label and disclosure hooks (FUND 3.2.2R, 3.2.2A). | This is the UK's Article 23-equivalent disclosure. The document set is your conduct defence — if the risk, fee and liquidity disclosures under-state reality, that is the file the FCA reads back. |
| Annual report (FUND 3.3) | An annual report for each AIF, with the prescribed financial and remuneration content, made available within the deadline. | Content and timing are fixed — scope the audit and remuneration-disclosure workflow against the deadline, not after year-end. |
| Reporting to the FCA (FUND 3.4) | Periodic transparency reporting to the regulator on the AIF's instruments, exposures, liquidity and risk — the UK's Annex IV return. | This is the recurring supervisory return most managers feel monthly/quarterly. Frequency scales with AuM and leverage — get the reporting-frequency classification right or you file the wrong cadence. |
| Liquidity & risk management (FUND 3.6, FUND 3.7) | Functionally separate risk management, a documented liquidity-management system consistent with the fund's redemption policy, and leverage limits the manager sets and the FCA can cap. | The liquidity system must match the redemption terms — a mismatch is the classic open-ended-fund failure the FCA probes first. |
| Valuation (FUND 3.9) | Proper, independent valuation procedures for each AIF's assets and its NAV per unit, with the valuation function functionally independent of portfolio management. | Independence is the point. If portfolio managers can lean on the valuer, the whole NAV is suspect — evidence the separation. |
| Delegation (FUND 3.10) | Conditions on delegating portfolio or risk management — objective reasons, due diligence, no delegation to the extent it turns the AIFM into a letterbox entity. | The letterbox test is the live one. Delegate too much substance and the FCA treats you as not really the manager — keep genuine decision-making capacity in-house. |
| Depositary (FUND 3.11) | The largest section: a single independent depositary per AIF, with safekeeping, cash-flow monitoring and oversight duties, and a strict liability standard for loss of financial instruments held in custody. | The depositary's near-strict liability is the investor protection — and it prices the relationship. Budget for it and for the oversight friction on illiquid holdings. |
| Marketing a UK AIF in the UK (FUND 3.12) | The pre-marketing and marketing notification mechanics for a UK AIF managed by a full-scope UK AIFM. | Notify before you market. The domestic route is the simple case — the hard case is marketing a non-UK fund, which runs through NPPR below. |
Marketing a non-UK fund into the UK — the NPPR
The part of FUND that matters most to managers outside the UK is FUND 10.5, the National Private Placement Regime. Since Brexit there is no inbound AIFMD marketing passport into the UK, so an EEA (or other non-UK) AIFM marketing an AIF to UK professional investors does it through NPPR: an FCA notification, plus ongoing transparency and, for the fund, the AIFMD-equivalent investor-disclosure and reporting conditions. FUND 10.4 covers third-country management. The practical reality is that the UK became a notification jurisdiction for EEA funds where it used to be a passport one — cheaper and lighter than full authorisation, but a real filing with real conditions, not a free pass.
What it works with
FUND is the UK's onshored twin of the AIFMD: read the two side by side and FUND 3 maps section-by-section onto the AIFMD's operating conditions and its Level 2 detail, because that is exactly what it was copied from — the gaps that have since opened between them are where the UK has edited its version and the EU has moved AIFMD II. For retail and authorised product rules the UK counterpart is COLL (including the LTAF), which FUND deliberately leaves alone. And when you are deciding where to run or market an alternative strategy touching UK investors, weigh FUND's manager obligations and the NPPR filing against the alternatives in the domicile comparison: post-Brexit, reaching UK money is a notification exercise under FUND 10.5, not a passport.
The gotcha: "we're AIFMD-compliant in the EU, so we're fine in the UK" is the trap. FUND started as a copy of the AIFMD but is now a separate, independently-amended rulebook — the reporting return, the disclosure hooks (sustainability labelling is a UK-specific graft) and the marketing route all differ, and there is no passport bridging them. Treat UK access as its own filing under its own rulebook, and check FUND against the live handbook rather than assuming it still mirrors Brussels.
To verify
- Exact FUND 3.4 (Annex IV) reporting-frequency thresholds — confirm the current AuM/leverage bands that set quarterly vs annual reporting against FUND 3.4 and the FCA's reporting guidance, rather than assuming the pre-Brexit AIFMD thresholds still apply unchanged.
- Current NPPR conditions and any fee changes — confirm the live FUND 10.5 notification conditions and FCA fees from the FUND 10.5 text before relying on them for a marketing plan.
- Overseas Funds Regime interaction — the OFR (a separate route for recognising overseas retail funds) sits alongside NPPR for some funds; confirm which route applies to a given fund rather than defaulting to NPPR.