Equity funds failing to provide necessary disclosure information

Jun 05, 2018
‘Persistent’ problem breaches EU investor protection

Many large equity funds are failing to provide investors with the disclosure information required under EU law, according to a new study.

Brussels-based investor rights group Better Finance examined 2,033 funds marketed across Europe and found 619 in breach of one or more of their legal obligations.

Of these, 98 are deemed ‘major offenders’ by failing to publish past performance of their benchmarks in key investor information documents (Kiids), which came into force in 2012 and aims to provide investors with a transparent and concise fact sheet of information about the fund.

The problem is just as bad among funds identified as ‘closet trackers’, which are funds that allegedly offer active management and charge accordingly but, according to Better Finance, offer performance that does not differ markedly from that of the index.

Of the 165 funds Better Finance considers to be closet trackers, 44 fail to properly disclose performance of this benchmark. They include funds run by asset management major players such as Fidelity International, Standard Life Aberdeen and Janus Henderson.

Guillaume Prache, managing director of Better Finance, says in a statement: ‘These persistent, widespread and clear breaches of EU investor protection rules are, in our view, as evidenced by this research, yet another call on EU public authorities to urgently and adequately stop this ongoing detriment to EU citizens as savers and investors.’



Sign up to get stories direct to your inbox
logo-black logo-black