New Rules for the Calculation and Presentation of Risks, Rewards and Costs in Key Information Documents

The EU Commission has amended the EU delegated regulation for the presentation and the content of the Key Information Document (KID) that sets out information on risks, rewards and costs to be given to retail investors (i.e. non-professional investors) in good time before they invest in alternative investment funds etc.

The amendments to the delegated regulation can be found here and include:

• new methodologies underpinning the calculation of appropriate performance scenarios and a revised presentation of these scenarios, to ensure that retail investors do not have inappropriate expectations about the potential return on investment they may receive;
• revised summary on cost indicators and changes to the content and presentation of information on the costs of PRIIPs to help retail investors better understand the different types of cost structures as well as to facilitate the use of this information by persons selling or advising about PRIIPs;
• a modified methodology underpinning the calculation of transaction costs to address practical challenges that have arisen when applying the existing rules and issues regarding the application to certain types of underlying investments;
• modified rules for PRIIPs that offer a range of options for investment to ensure more clarity of the information on their costs.

Next Step: The amendments to the delegated regulation will apply from 1 July 2022.

Tags:  KID / PRIIPS