The European Securities and Markets Authority (ESMA) recently published a Questions and Answers document on the UCITS Key Investor Information Document (KIID).
The Q&A aims to promote common supervisory approaches and practices in the application of the UCITS Directive 2009/65/EC and its implementing measures. The Q&A is aimed at competent authorities to ensure their supervisory actions are in line with the responses adopted by ESMA. The Q&A will be continually updated, as and when new questions are raised and responded to.
The key elements of the Q&A are as follows:
Requirements where UCITS no longer marketed or where UCITS is in liquidation
While a UCITS is required to keep the essential elements of a KIID up to date, even where it is no longer marketed to the public, there is no requirement for a UCITS in liquidation to prepare up-to-date KIIDs.
Provision of KIID to Prospective and Existing Investors
All prospective investors, including professional investors, must be provided with a KIID. Existing investors should be provided with a KIID where they make additional investments, or where they switch between sub-funds within an umbrella. However, where unitholders invest through a regular savings plan, a KIID is only required where a change is made to the subscription arrangements.
Treatment of Share or Unit Classes
Information relevant to a number of share or unit classes may be combined into a single KIID provided the resulting KIID complies with all KIID requirements (including the limit on length). A share or unit class may be selected to represent one or more classes provided the information in the KIID is fair, clear and not misleading to prospective investors in other classes. As share or unit class fee structures differ, the class with the highest fees or charges is the most appropriate to be selected as the representative class.
Past Performance
Where there is insufficient data to provide a useful indication of past performance, this can be indicated in the KIID. Where a UCITS will not measure performance against an index, it is not necessary to refer to the index in the KIID’s past performance section. However, where a UCITS will measure its performance against an index, but will not track that index, the performance of the benchmark index must be shown.
Miscellaneous
The Q&A also provides some guidance in relation to the requirement to use clear language in the KIID.
For further information, please contact one of the key contacts listed above or your usual contact in our Asset Management and Investment Funds Team.
