UCITS IV is an EU Directive that introduces a number of important changes to the regulatory landscape. One of its main enhancements is the creation of the Key Investor Information Document (KIID). Here, we will give you information you will need to help you understand these changes and what they will mean for investors.
What is a KIID?
What is its purpose?
KIIDs are designed to help investors make informed investment decisions. To that end, they provide standardised and comparable fund information, written in simple, jargon-free language. For consistency purposes, the layout and content are prescribed by the Directive.
What is the difference between a KIID and a SP?
The SP and the KIID are both pre-contractual documents. Unlike SPs, however, fund management companies are obliged by law to ensure that investors have read the most up-to-date KIID before they make investments in a fund.
How do I confirm I have read the KIID?
When investing by post, investors must complete an application form. A new declaration has been added to our application forms stating that the investor has received and read the KIID relevant to the investment.
For deals placed by telephone, we will ask investors to confirm they have received and read the KIID. If this cannot be confirmed, the deal cannot proceed until this confirmation can be provided.
What is the SRRI?
Each KIID contains a risk and reward rating known as the Synthetic Risk Reward Indicator (SRRI). The SRRI is calculated using the volatility of a share class’s performance over a five-year period. Volatility means how much a fund has gone up or down over a period of time. Each share class will be allocated a risk category, running from one to seven, where one is the lowest level of risk and seven the highest. Of course, no investment is “risk free”, but this will allow investors to decide how much risk they are willing to take within their portfolio.
When were KIIDs introduced?
The Directive required KIIDs to be available for investors by 1 July 2012 at the latest.
How often will a KIID need to be updated?
Annually, and issued within 35 business days following the end of the calendar year.
The KIID will be continually monitored and, when required, updated to reflect any material changes to fund. These could include a change to the fund’s name; objective or policy changes; or an alteration to the risk and reward profile of the fund.
What about questions not covered in the KIID?
In addition to the KIID, fund management companies must also make available a Supplementary Information Document (SID). This will provide further useful information for investors, including details on cancellation, complaints and compensation procedures.
What are SWIP’s responsibilities in relation to delivery of KIIDs to distributors?
Upon request, SWIP must make KIIDs available to distributors. We must also ensure our direct investors receive the relevant KIID in good time before they make their investment.
What are distributors’ responsibilities?
Distributors must also provide the relevant KIID in good time before the investor makes an investment.
When a KIID is updated, are distributors obligated to inform existing investors affected by share class?
No, there is no obligation to send revised KIIDs to clients with existing investments.
For additional investments, investors are required to confirm that they have read the up-to-date KIID before making an investment.
Which SWIP funds will have KIIDs?
The current SPs for all SWIP UCITS will be replaced by KIIDs. These will be produced according to sub-fund and also at share class level, namely:
KIIDs will not be produced for the following non-UCITS retail schemes:
Any funds that are closed to new and existing business prior to 1 July 2012.
Where can I read or download KIIDs from?
KIIDs are available for investors to read, download or print on our website (swip.com). They are also available for distributors on FundsLibrary.
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