Kids are part of the Packaged Retail and Insurance-based Investment Products (Priips) regulation, which came into force on 1 January.
The regulation requires funds to have a document, Kid, available online for investors that illustrates the potential return to shareholders under certain market conditions.
However, Baillie Gifford, which runs the Scottish Mortgage trust, is concerned the design of the documentation is seriously flawed because the scenarios Kids are based on relate to past performance.
This, it said, could lead to investors receiving poor information at the point of sale which is potentially misleading.
Anderson said: “We are extremely disturbed by the requirements of the Key Information Document. We do not believe that reliance on past performance data is ever a sufficient guide to the many possible future outcomes in stocks and markets.
“The persistent and steady rises characteristic of the last five years seem especially questionable as a guide. We consider the most important risks in markets to be intrinsically unpredictable and unmeasurable.
“We would also highlight that the emphasis on the short-run demanded in the Kid, seems to us to be acutely misguided. We continue to stress to retail shareholders that we focus, as we believe they do, on building capital in the long term.
“We believe that an undue preoccupation with short-term volatility undermines this commitment – and indeed the ultimate purpose of financial markets.”
Graham Laybourn, partner responsible for compliance and legal at Baillie Gifford, added: “Such is the concern of this new Kid disclosure, we have seen the independent boards of a number of our investment trust clients writing directly to the FCA.
“We fully support the views expressed by our investment trust directors that these mandated performance scenarios have the potential to set unreasonable expectations when being read by our retail investors.”
Shortly after the introduction of Priips earlier this month, certain providers temporarily removed a handful of investment trusts from their platforms as providers failed to deliver Kids on time.
