UCITS or ‘undertakings for the collective investment in transferable securities’ are investment funds regulated at European Union level. They account for around 75% of all collective investments by small investors in Europe. The legislative instrument covering these funds is Directive 2014/91/EU. (From the European Commission website.)
As these funds are regulated at European level, they can be marketed across the EU without having to be concerned with which country a fund is domiciled in, thanks to a straightforward notification procedure. It saves costs for fund providers, as they no longer have to create specific funds for each market.
Due to the intense regulatory process to have a fund approved as UCITS compliant by a regulator, the UCITS label serves as a stamp of quality and reliability for investors.