ESMA Publishes Guidance On Performance Fees In UCITS And Certain AIFs

On the 3^rd April, 2020, the European Securities and Markets Authority ("ESMA") published its final guidelines on performance fees in Undertakings for Collective Investments in Transferable Securities ("UCITS") and certain types of Alternative Investment Funds ("AIFs"). The guidelines provide comprehensive guidance to fund managers when designing 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.

Their purpose is to harmonise the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid, in order to establish consistent, efficient and effective supervisory practices within the European System of Financial Supervision ("ESFS"), and to ensure the common, uniform and consistent application of Union