Looking at 100 completed KIIDs’ documents from 29 asset management houses across Europe, a study by Kneip described the contents as “fairly good” and “generally correct”, adding that “improvements can be made in the form and presentation of the document”.
One of the report’s conclusions is that “the vast majority of samples fell short of respecting the prescribed texts and presentation of information”.
On a more positive note, Mario Mantrisi, head of product management at Kneip, commented: “Broadly, we were impressed with the positive strides the industry has made ahead of July 2012. What the research highlights is that asset managers have made excellent progress with the content of the KIID, while the form needs work.”
He went on to say that the prescriptive nature of the regulations give little room for interpretation or formatting so fund managers distributing KIIDs will not necessarily “pass the scrutiny of regulators”.
Examples of issues revealed by the research
- Inconsistencies: “The fund invests mainly in shares…” is written in the Objectives and Investment Policy, whereas “The Fund may invest a substantial part of its assets in sovereign and corporate bonds” is written in the Risk and Reward Profile narrative.
- If a benchmark is mentioned in the Objectives and Investment Policy, it must be shown on the Past Performance chart, and vice versa.
- More than half (56%) misrepresented the Past Performance bar chart.