Is it permissible to include US Exchange Traded Funds (US ETFs) in our PEPP portfolios, or are we restricted to include only Undertakings for the Collective Investment in Transferable Securities (UCITS)? We would greatly appreciate your clear interpretation and guidance on this matter as we continue to develop our PEPP offerings. 

PEPP providers must invest the assets corresponding to the PEPP in accordance with the 'prudent person' rule, as set out in Article 41(1) of the PEPP Regulation. In addition, sectorial law applicable to the PEPP provider may set more stringent provisions – Article 41(2) of the PEPP Regulation.

While complying with such principles, the PEPP Regulation ensures an appropriate level of investment freedom for PEPP providers. PEPP providers can invest in a large array of asset classes, including Exchange Traded Funds and in assets denominated in currencies other than those of the liabilities. PEPP providers are not restricted to investing only in Undertakings for the Collective Investment in Transferable Securities (UCITS).