Undertakings in Collective Investments and Transferable Securities ("UCITS")
(i) ESMA updates Q&As on the application of the UCITS Directive
On 29 March 2019, the European Securities and Markets Authority ("ESMA") published an updated questions and answers document ("Q&As") on the application of EU Directive 2009/65/EC (the "UCITS Directive").
The purpose of the Q&As is to promote common supervisory approaches and practices in the application of the UCITS Directive and its implementing measures. The updated Q&As provide the following clarifications in respect of the UCITS KIID benchmark disclosure and past performance disclosure:
- UCITS should clearly indicate, in the KIID, whether their strategy is 'active' (or 'actively managed') or 'passive' (or 'passively managed');
- A UCITS managed in reference to a benchmark is one where the benchmark plays a role in the management of the UCITS, for example, in the explicit or implicit definition of its portfolio composition and/or performance objectives and measures; and
- Investors should be provided with an indication of how actively managed the UCITS is, compared to its reference benchmark index.
- Where funds name a target in their investment objectives and policies, the performance should be disclosed against the target, even if the comparator is not named a 'benchmark'; and
- The performance disclosed in the KIID regarding a benchmark index should be consistent with performance disclosure in other investor communications.
The updated Q&As can be accessed here.
(ii) Central Bank publishes twenty-fifth edition of the UCITS Q&As
On 29 March 2019, the Central Bank published the twenty-fifth edition of its "UCITS – Questions and Answers" (the "UCITS Q&As"). The UCITS Q&As include a new Q&A ID 1089 in relation to Irish UCITS which acquire Chinese bonds through the Bond Connect infrastructure.
The Q&A clarifies that if an Irish authorised UCITS proposes to acquire Chinese bonds through Bond Connect, the depository of the UCITS, or an entity within its custodial network, must ensure it retains control over the bonds at all times.
The updated UCITS Q&As can be accessed here
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