EU Retail Investment Strategy: Key Impacts For Fund Managers

Below we summarise the material new obligations UCITS management companies and AIFMs (together, “Management Companies”) need to plan for.

New undue costs framework

Management Companies will be required to prevent undue costs from being charged to their funds and investors. Costs are “due” only if they:

• are disclosed in the fund’s prospectus or key information document (“KID”)
• are necessary for the fund to operate in line with its investment strategy or regulatory requirements
• are borne by investors in a fair way

Management Companies must conduct an annual assessment of whether undue costs have been charged. Where undue costs are identified, reimbursement to unitholders is mandatory without undue delay. Management Companies must take all reasonable steps to identify unitholders in order to reimburse any amounts unduly charged. Situations where undue costs have been charged must be reported to the home national competent authority (“NCA”), the depositary and the fund’s