New Mutual Funds Available Only to Accredited Investors

The Argentine Securities Commission (CNV) issued General Resolution 1030/2024 on November 1, 2024, implementing regulatory changes regarding Mutual Funds (FCIs).

First, the Resolution establishes that Exchange Traded Funds (ETFs)[1] may be the underlying asset of Argentine Depositary Certificates (CEDEARs) if they passively replicate widely distributed indexes related to variable income (stocks), virtual assets, and/or commodities. Additionally, the public offering under any of its forms of foreign mutual funds—including underlying asset of CEDEARs or any other representative security—must be made exclusively through FCIs created in accordance with the provisions of Law 24083 on Mutual Funds. They must also be registered before the CNV.

If the underlying ETF passively replicates widely distributed variable income indexes and has, at least, a liquidity index equal to or greater than the MERVAL index, the units of the local fund may also be subscribed by investors not recognized as “Qualified Investors,”[2] provided they have been clearly warned of the risks involved in the transaction and they unequivocally state their intention to acquire such units.

Second, the CNV will incorporate to its rules a special regime to create open-end FCIs exclusively for Qualified Investors. In this case, agents acting in the placements must verify that subscribers meet the conditions to be considered such.

Further, the Resolution eliminates the requirement according to which open-end FCIs intended exclusively for Qualified Investors and denominated in foreign currency had to invest at least 75% in assets issued and traded in Argentina. This type of FCIs can now receive only subscriptions from accounts located abroad.

Moreover, investments in assets issued abroad are subject to certain limitations, for example in cases where the acquisition of a single ETF is provided for. A reference to the name of the underlying fund must be included in the name of the local fund.

The provisions incorporated through this Resolution do not have retroactive effect regarding CEDEARs programs that have underlying funds that replicate actively managed indexes.