This consultation paper proposes rules and guidance to improve the quality, comparability and robustness of information available to investors.
The proposals seek to address our concern that fund objectives are not as clear or specific as they could and should be, and that the benchmarks a fund my have are not always presented consistently and appropriately.
We propose to publish guidance on how we expect fund managers to make their funds’ objectives more useful to investors. This sets out what we expect when funds disclose their objectives, and reiterates that descriptions of objectives in key information documents should avoid jargon. The guidance also explains when we expect a fund to disclose that its portfolio construction is in practice constrained relative to a benchmark.
We are also consulting on proposals so that, if a fund has benchmarks, their use must be explained and referenced consistently in consumer facing documents. This includes a proposal to ensure that benchmarks are shown consistently against fund past performance.
The proposals related to objectives have been informed by a working group, which included a wide range of stakeholders, including asset management firms and investor groups. We are grateful for the time and expert input of this group, which has helped to shape our proposals.
The consideration of benchmarks and their uses in this CP is distinct from the new EU Benchmarks Regulation (BMR).
Who this applies to
These proposals apply to UK authorised fund managers in respect of their management of authorised funds.
They may also be of interest to others in the investment management industry, including delegated portfolio managers, depositaries of authorised funds. We would also welcome feedback from retail and professional investors, including advisers.
What you need to do
Please send your feedback on this CP to us by 5 July 2018.
You can also:
- email [email protected] or
- write to: Karen Northey, Strategy and Competition Division, Financial Conduct Authority, 25 The North Colonnade, London E14 5HS
We will consider feedback before finalising our rules. We will also take into account any other relevant legislative developments.