Whilst the KIID is a 2 page document, there are over 100 pages of Regulation and Guidance, as set out below:

ESMA’s Guidelines

For all UCITS regulations and Guidelines, click here.

Some National Authorities have also issued relevant further Guidelines and Q&A. For example:

There is a challenge of dealing with the volume of KIIDs as:

To reduce the number of KIIDs, it is possible to have:

It is the responsibility of the UCITS to select the most appropriate representative share class.

However, ESMA also make clear that, where charging structures differ between classes, the share class with the highest overall charge is the most appropriate representative share class to avoid the risk of understating charges.

A class would not be regarded as representative for example when its currency of exposure is different e.g. A USD class should not be used to represent a GBP class unless the GBP class is hedged to USD.

The KIID can be updated as frequently as a UCITS wishes. However, it must be updated:

• prior to or following any material change to static data e.g. manager name, address

• prior to or following any material change to dynamic data e.g. to SRRI, to Ongoing Charge)

• prior to a proposed change to the fund rules, instrument of incorporation or prospectus; or;

• at least annually, and within 35 business days of each calendar year end.

In accordance with Article 82 of the UCITS Directive, a UCITS is required to keep the essential elements of key investor information up-to-date.

The Annual Update – In accordance with Article 23 of Commission Regulation (EU) No 583/2010, a KIID with duly revised presentation of past performance of the UCITS shall be made available no later than 35 business days after 31 December each year.

The SRRI of a fund should be revised and the KIID updated if it risk category has changed on each weekly or monthly data reference point over the preceding 4 months.

KIIDs for funds selling into the United Kingdom must be filed with the FCA. The new KIID shouldn’t be made available until the FCA confirms noting of the KIID.

Layout:

The CESR Guide to Clear Language and Layout, includes the following Guidelines:

Content and use of clear language:

The CESR Guide to Clear Language and Layout includes the following requirements for KIIDs:

CESR provides the following examples of jargon and technical terms: allocation date, appreciation, denominated equity, erosion establishment, expire, exposure, liquid, negative growth, redemption, repurchase, volatile.

CESR provides the following example of unclear language:

“Where, in the Manager’s judgement, there is significant uncertainty that a bond holding will be redeemed at par; the amortised capital component for that holding is retained in the fund’s capital and not distributed. This has the effect of reducing the estimated redemption, distribution and underlying yields and the actual distribution rate.”

KIIDs must be provided to investors before they decide to invest.

An updated KIID does not need to be provided to existing investors unless they are making additional subscriptions. Investors always have the right to be provided with the KIID on request.

Note, KIID need also to be provided to:

Synthetic Risk Reward Indicators (SRRI) calculations are required for UCITS KIIDs.

The SRRI translates the volatility of the returns into an SRRI classification. Depending on the result of the volatility calculations, the fund is allocated into one of the seven SRRI risk classes between 1 (low) and 7 (high).

The SRRI of a fund should be revised and the KIID updated if it risk category has changed on each weekly or monthly data reference point over the preceding 4 months. Therefore, the SRRI of the fund should be monitored and controlled on an ongoing basis.

Click here for more details.

KIID is a regulatory document and therefore can be charged to the fund.

Technology etc required to support its production can also be charged.

This may provide an opportunity to invest in Enterprise Content Management / Document Management / Translation and reporting tools.

In the UK, there is also a requirement for an additional document containing supplementary information to be supplied with the KIID — the “Supplementary Information Document” (SID).

The SID provides supplementary information not contained in the KIID.

This includes information such as how to buy or sell investments, how to get more information about an investment, details of cancellation rights, how to complain, entitlements to compensation in the event that a firm cannot meet its liabilities and data protection policies.