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20 November 2012

ALFI UCITS IV implementation project – KID Q&A Document


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ALFI's Key Investor Information Document (KID) working group has analysed the UCITS IV implementing measures on the KID adopted by the European Commission by Regulation (EU) n° 583/2010 of 1 July 2010, as well as related regulatory guidelines and the use of KID in distribution networks.


The prescription in Art 3(1) of the EU Regulation 583/2010 could not be clearer: "No other information or statements  shall be included except where this Regulation states otherwise". The incorporation of the features described in the  question therefore becomes a matter of interpretation; what do the other articles of the Regulation require and permit? Because the Regulation contains no mention of shareholder eligibility criteria, transaction and holding minima or  the name of the investment manager or adviser, ALFI thinks that there are good grounds to suppose that they are not "essential" features of a fund, important though they are. ALFI therefore thinks that they are not required and would  therefore not include them in the KID.

ESMA/2012/592 confirms that the name of the investment manager(s) of the  UCITS should not be disclosed, but rather only the name of the UCITS management company. However, ALFI recognises that some practitioners might still consider at least the remaining features to be essential and therefore wants to know whether they are permitted and if so how to include them. In their case, ALFI thinks that the most plausible interpretation for permitting them is under Art 7(1) of the Regulation, where the word "including" suggests a non-exhaustive enumeration of the contents of that section of the KID, which contains similar information about redemption upon demand and a minimum holding period (Arts 7(1)(b) and 7(2)(f) respectively).

ALFI sees three reasons to be cautious about this: (1) regulators may consider that inclusion of additional information would create undesirable differences between supposedly standardised documents, which militate against the KID's purpose of greater transparency and comparability between products, (2) there may be no room in the KID to include such information without reducing it to "small print", and (3) ESMA/2012/592 explicitly rejects the disclosure of the name of the investment manager(s), whereas the disclosure of the name of the fund’s management company is based on Art 4(12)  of the Regulation.

Full document



© ALFI - Association of the Luxembourg Fund Industry


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