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ARTICLE · 16 JANUARY 2014

FCA Statement On Descriptions Of "Absolute Return" And The Like

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The FCA has published a webpage on the implementation of COLL 4.2.5R(3)(ca).

United KingdomFinance and Banking
Harvey Knight
Harvey Knight
Kirsten Lapham
Kirsten Lapham
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The FCA has published a webpage on the implementation of COLL 4.2.5R(3)(ca), which applies where a UCITS scheme or a non-UCITS retail scheme (NURS) has indicated in its name, investment objectives or fund literature (including in any financial promotions for the fund), by using descriptions such as "absolute return", "total return" or similar, an intention to deliver positive returns in all market conditions and where there is no actual guarantee of such returns.

If these descriptions are used, additional disclosures must be made in the prospectus, specifying that capital is in fact at risk, the investment period over which the fund aims to achieve a positive return, and that there is no guarantee that this will be achieved over that specific, or any, time period. The FCA provides details of the approaches taken by authorised fund managers (AFMs) with the aiming of complying with COLL 4.2.5R(3)(ca) which includes:

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