CSSF applies the ESMA Guidelines on performance fees in UCITS and certain types of AIFs

Context and objectives

On 18 December 2020, the CSSF published the CSSF Circular 20/764 about the Guidelines on performance fees in UCITS and certain types of AIFs. This Circular applies the final Guidelines of ESMA on performance fees published on 5 November 2020.

Date of application

The Guidelines apply as from 6 January 2021.

• Managers of any new funds created after the date of application of the Guidelines with a performance fee, or any funds existing before the date of application that introduce a performance fee for the first time after that date, should immediately comply with these Guidelines, in respect of those funds.
• Managers of funds with a performance fee existing before 6 January 2021 should apply these Guidelines in respect of those funds by the beginning of the financial year following 6 months from 6 January 2021.
  The first funds to apply the Guidelines will be those with a fiscal year ending on 31 July 2021. The compliance date will be as from 01 August 2021.

• The Guidelines will also be applicable as of 6 January 2021 for any newly created sub-funds of an existing umbrella, i.e. in relation to any new sub-fund setting up a performance fee at sub-fund or share classes’ level.
  
  

Guidelines on performance fees

These 35 guidelines concern the following points:

• The calculation methodology;
• The obligations of disclosure in the prospectus;
• The information at the KIID level;
• The elements to disclose in the semi-annual and annual reports;
• The obligation to justify the calculation method used; and
• The justification for the choice of a benchmark or its non-use.

As a reminder, funds concerned by the guidelines UCITS funds, but also AIFs with classes open to retail investors within the meaning of MiFID II.

For more details regarding the Guidelines, please refer to our previous Regulatory News Alert on performance fees regulation.
 

How can Deloitte help?

Deloitte’s advisory performance fees specialists can help you reviewing your performance fees wording and calculation in light of the evolution of the regulatory framework and market practices based on his more than 20 years’ experience on performance fees.

Via our Regulatory Watch Kaleidoscope service, Deloitte can also help you stay ahead of the regulatory curve to better manage and plan upcoming regulations.

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