EUROPE: Survey reveals industry still unprepared for UCITS IV KID

Friday June 18 2010

Despite the KID `s significance, the recent survey reveals that only 36% of asset managers surveyed have so far looked into the cost implications of the necessary changes to their systems.

Whilst acknowledging that the KID is a step in the right direction, 60% of the respondents have expressed concerns over the level of detail in the KID as being insufficient.

On identifying the Risk and Rewards of the Investment through the KID, CESR had recommended a methodology for calculating the a synthetic risk reward indicator. 76% of the respondents feel the use of such an indicator will not suit all UCITS.

50% of the Investors believe that Civil Liability will be applicable to the KID disclosures, a further 25% being unsure.

The survey also found that 39% of the respondents thought that the KID would help create a level playing field for UCITS while 30% thought of quite the reverse.

Click on the above link for the survey.

As the countdown to the July 2011 implementation deadline of UCITS IV continues, PwC and EFAMA have in a concerted effort published a survey entitled UCITS IV: Time for change highlighting the asset management industry `s views on the Key Investor Information document (KID).

The KID is one of the key features of the upcoming piece of legislation. Investors should expect clear, easily understandable and relevant information when considering an investment into a UCITS. The existing Simplified Prospectus which was introduced in 2001 has proven to be a complex document and of very limited use to the average investor and UCITS IV aims to address this by replacing it with the KID.

The KID will be a simplified document containing clear and concise information and must be produced for each sub-fund, each feeder UCITS fund or in the case of multiple share classes, it must be produced for each share class, except where a share class can be selected to represent other share classes and certain conditions are met. Some 19% of the respondents have expressed concerns that this will lead to a requirement of producing too many documents.