Luxembourg

Details

  • Service: Audit, Audit, Regulatory Engagement, Advisory, Internal Audit Services, Corporate Governance, Regulatory Compliance, Tax, Financial Services, Investment Management
  • Industry: Financial Services, Fund Management
  • Type: Business and industry issue, Publication series
  • Date: 11/22/2010

KPMG Investor Information Services for the Key Investor Information Document 

The UCITS IV Directive offers many strategic and organisational possibilities to fund houses and at the same time considerable challenges. One of the biggest challenges for Management Companies is the provision of the new Key Investor Information document, KIID, which replaces the Simplified Prospectus from the 1st of July, 2011 with a grandfathering period until 1st of July, 2012. The UCITS Directive has a prescriptive list of requirements that which the KIID must be in compliance. Each KIID must be compiled with regard to these requirements, of which one being that the length of the document is limited to two pages per KIID (three pages in the case of structured funds). The KIIDs must also be written in “plain language” and must be produced in the official languages of the counties of distribution.

The KIID is made of: Title, Management Company details, Objective and Investment Policy, Risk and Reward profile, Charges, Past Performance and Practical Information including Authorisation details. For structured funds, the Past Performance section is not applicable but the Management Company must include, in the Investment Policy section, three performance scenario;  favorable, unfavorable and medium scenarios. From this one can derive certain challenges, which include:

  • Consistency between the various publications (prospectus, KIID, website, fact sheets, etc.)
  • Review of distribution contracts
  • Synthetic Risk and Reward Indicator, “SRRI”, calculation
  • Quality assurance over the final deliverable
  • Sheer volume (funds, sub funds, share classes, several languages)
  • Updating of  KIIDs pre material changes
  • Updating of KIIDs 35 business days after 31 December each year to update past performance
  • KIID must be written in plain language
  • KIID must not exceed 2 A4 pages (3 A4 pages for structured funds)
  • Dissemination
  • Translations, considering both “plain language” constraints and length constraints.


As a consequence of the KIID regulations, KPMG has decided to strategically position itself as a leading provider in this area. Various capabilities and expertise have been developed (SRRI, simulation of past performance, production models, country specific requirements). KPMG also has an IT system which allows for the full automation of the KIID production. In short KPMG provides for the full outsourcing of the KIID production and compilation.

 

Management companies may have to revise their internal organisations in order to manage the KIID requirements and to ensure consistency between the other funds documentation (prospectus, fact sheet, marketing material, etc). The KIID production will also require scalable teams, such as at the beginning of the calendar year for the update of all KIIDs. Due to these various reasons, amongst others, large numbers of Management Companies are looking for an outsourced solution for to meet their specific needs. KPMG has developed a fully outsourced which includes various added value services and a compilation report, ISRS 4410, that can be disclosed to third parties.

 

For more information, please contact:

 

 Vincent Heymans, Partner  
 vincent.heymans@kpmg.lu
 + 352 22 51 51 7917  

 

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