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.

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. 

Besides risk, return, and costs, the KID covers: the recommended holding period, insolvency protection, complaints procedures, and links to supporting documents (for some products like UCITS).

This is a common question that many hesitate to ask. Here’s a simple breakdown:

EU Transaction Costs: Here the overall value of the transaction cost is floored at the level of the explicit transaction cost. Negative implicit transaction costs, Anti-Dilution Levies (ADL) or Swing Proceeds can not bring the total transaction cost below the explicit cost. If explicit costs are zero, the total transaction costs disclosed will be at least zero as well and cannot be brought below zero.

UK Transaction Costs: If the explicit and implicit costs combined are positive, the ADL can be substracted but it cannot bring the total cost below zero. Hence in this case a floor of zero applies. However, if the explicit and implicit costs combined are already negative, no ADL can be further deducted and it cannot impact the total transaction cost to become more negative or further below zero. Please note that in the latter case, the total reported UK transaction cost can be negative. Note that the FCA released a new CCI proposal that will make the implicit transaction cost no longer required for UK Product Summary Documents.

Both are 1–7 risk scales derived from volatility calculations, but they use different methodologies and formulas to measure that volatility.

Category III instruments are structured products with non-linear payoffs. Category IV is a fallback category used for instruments whose payoff depends on non-observable parameters.

A UCITS KIID (Key Investor Information Document) is a short, standardized document required under EU rules that gives investors clear, comparable information about a UCITS fund’s objectives, risks, costs, and past performance.