ESMA publishes its Guidelines on performance fees applicable to UCITS and certain types of AIFs

8 Apr 2020

On the 3rd April 2020, the European Securities and Markets Authority (“ESMA”), the EU’s securities markets regulator, has published its Guidelines on performance fees in investment funds applicable to Undertakings for the Collective Investment in Transferable Securities (“UCITS”) and certain types of Alternative Investment Funds (“AIFs”).

 

By means of these Guidelines, fund managers are provided with a complete guidance in relation to the planning of the performance fee models for the funds they manage, including the assessment of the consistency between the performance fee model and the fund’s investment objective, policy and strategy, particularly when the fund is managed in reference to a benchmark.

 

ESMA’s Guidelines are designed to adjust the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid. Since these requirements will have the same application throughout the European Union, this will provide convergence between National Competent Authorities in supervising performance fees models and disclosure. Furthermore, in order to ensure a consistent level of security to retail investors, the Guidelines are applicable to both UCITS and certain types of AIFs.

 

The Guidelines will be translated into the official EU languages and will be published on ESMA’s website. ESMA notes that the Guidelines will become applicable after two months have elapsed from their publication,

 

Please feel free to contact us should you require further information on the requirements applicable to investment funds.  

 

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