Draft legislation excluding investment trusts from the requirement to produce Key Information Documents (KIDs) does not apply to venture capital trusts (VCTs), according to the Association of Investment Companies (AIC).
A draft Statutory Instrument published earlier this week (7 October) absolves investment trusts from producing KIDs and from publishing ongoing costs, as required by open-ended funds.
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Previously, closed-ended funds were required to produce KIDs in the same way that open-ended funds are. However, this forced investment trusts to effectively ‘double-count’ their costs as shares are already bought at market price on the stockmarket.
The AIC said the draft explicitly excludes VCTs despite previous assurances from the Treasury they would be included.
Richard Stone (pictured), chief executive of the AIC, said the association was “surprised and disappointed” to learn that VCTs were excluded from the legislation.
“It is now widely accepted that cost disclosures mandated by PRIIPs and MiFID are misleading – and they are misleading for VCTs as well as for investment trusts. There is no logical basis on which they have been singled out for exclusion from this exemption.
“We are engaging with the Treasury to understand why this has happened and will be pressing for the legislation to be amended to include VCTs, which have such an important role in backing up-and-coming UK companies.”
