Common fund


A common fund is a form of collective investment scheme based upon contractual law rather than being enacted through a trust, corporation or insurance policy.
The model for this type of arrangement is the Fonds commun [de placement] common in France and Luxembourg.
The common contractual fund in Ireland is another prominent example.

Legal structure

A common fund is typically established under contractual law rather than through a corporate or trust structure. Under this model, the fund itself has **no separate legal personality**; instead, assets are held collectively on behalf of unitholders and managed by an authorised management company on their behalf. As a result, the management company and its custodian have responsibility for the fund’s assets, but the fund itself cannot hold assets or incur liabilities in its own name.
Under French law, for example, a *fonds commun de placement* functions as a collective investment scheme without legal personality, where investors co-own the fund’s assets proportionally to their units. The management company acts in the name of the fund to manage and invest the assets, while a separate custodian holds the assets on behalf of the unitholders.