On 26 March 2015, ESMA published an update to its document Questions and Answers: Key Investor Information Document (KIID) for UCITS (Q&As).

In its most recent revision, under Question 4 (Past performance), ESMA has included a new Q4g.

ESMA confirms that where there is a fund merger and the receiving UCITS is a newly established UCITS which has no performance history, the UCITS should use the past performance of the merging UCITS in the KIID of the receiving UCITS provided that the competent authority of the receiving UCITS “reasonably assesses that the merger does not impact the UCITS’ performance”.

ESMA notes that the performance of the UCITS would be considered to be impacted if there is a change to the investment policy or to the entities involved in the investment management of the fund. It should also be made clear in the receiving UCITS’ KIID that the performance is that of the merging UCITS.

If the receiving fund is not a newly established UCITS and has its own performance history or the receiving fund is a newly established UCITS but the competent authority determines that the merger does in fact impact its performance then it remains the case that only the past performance of the receiving UCITS can be disclosed in the KIID, and not the past performance of the merging fund.

Contributed by James Phelan