Regulatory Frequently AskedQuestions78

Not necessarily. Costs are ex-ante estimations based on the last available annual accounts (ongoing charges), three-year averages (transaction costs) or 5-year averages (performance scenarios). Actual costs can differ due to higher/lower transaction fees, different performance fees, or early redemption compared to the Recommended Holding Period. The costs displayed in the KID disclosed are always based on backward looking models.FITZ Partners, a member of the RiskConcile group, offers clients detailed actual cost data. For further information, please refer to www.fitzpartners.com.

The KID ensures transparency and comparability. It allows investors to: understand product risk, compare costs across providers, and review possible performance outcomes.

Scenario outcomes depend on the selected historical data window and holding period. Benchmarks may differ, costs may vary, and the underlying historical data itself can also differ. Periods of strong bull markets or market stress can significantly impact the results.

Since 1 January 2023, only UCITS distributed in the UK are required to produce a UCITS KIID. UCITS marketed in the EU must produce a PRIIPs KID, and the UCITS KIID will be replaced by the CCI Product Summary.

Structured deposits are assigned a pre-determined risk and return score of 1.

A consumer composite investment is assigned a pre-determined risk and return score of at least 9 where it is a CFD, a contingent convertible security (CoCo bond), a derivative, a security issued by a venture capital trust, or an investment in an Enterprise Investment Scheme (EIS). A score of at least 9 also applies where the CCI has a volatility track record of less than five years, reflecting its classification as very high risk due to insufficient historical data. In addition, a pre-determined score of at least 9 applies where the investment strategy involves significant leverage, where the retail investor could lose more than the amount invested, or where the pricing frequency is less than monthly.

Constraining benchmarks and target benchmarks must be included in the past performance chart. Comparator benchmarks may also be included, but their inclusion is optional.

When a fund invests in one or more other funds, its ongoing costs should include all costs and charges incurred as an investor in each underlying fund.

According to regulations 2017/653 and 2021/2268, updates are required at least once per year. However we advice to calculate and monitor on quarterly or bi-annually basis. The monitoring is needed to ensure material changes are captured and reflected in the KID. Additionally, this gives a deeper understanding of how the final transaction cost values are derived. 

A manufacturer must increase the risk and return score where its assessment indicates that the initial score may cause a retail investor to underestimate the risks of the consumer composite investment. In addition, where a consumer composite investment features low liquidity, the manufacturer must increase the score by one notch. Where the score is already 9, this additional increase does not need to be applied.

A manufacturer may reduce the risk and return score where it considers the score likely to overstate the overall risks of the investment, for example because the volatility calculation period included extreme market anomalies. A more significant reduction may be applied where the investment benefits from at least 90% capital protection under all market conditions. Any adjustment must be supported by documented rationale. However, the risk and return score of consumer composite investments assigned a pre-determined score of 9 cannot be reduced.

A manufacturer may depart from the standard approach where, on reasonable grounds, it expects future costs and charges to be materially different from those calculated using the preceding 12-month period (for example, due to a change in management fees). Where a fund has existed for less than 12 months, or where historical data would be misleading (excluding transaction costs), the manufacturer may instead base its estimates on the costs and charges of a reasonably comparable CCI. In such cases, the product summary must clearly identify which costs are estimated.