The European Securities and Markets Authority (ESMA) has published on 3rd April 2020 its guidance on performance fee for UCITS and certain AIFs.
This guidance is the result of the consultation paper issued on 16 July 2019 and closed on 31 October 2019 which aims to harmonize the performance fee charged by managers but also to increase transparency for investors.
The guidance is based on five main topics:
- Calculation method guidelines
- Consistency guidelines
- Crystallisation frequency guidelines
- Negative performance guidelines
- Disclosure guidelines
The guidance is applicable for UCITS, open ended AIFs marketed to retail investors; it will enter into force two months following the publication of the translations into official EU languages on ESMA website. This publication will trigger a two-month period during which National Competent Authorities (NCAs) must notify ESMA whether they comply or intend to comply with the guidelines.
Managers of funds launched after the date of entry into force must comply immediately.
Managers of funds existing before the date of entry into force and introducing a new performance fee for the first time after the date of entry into force must comply immediately.
Managers of funds existing with a performance fee before the date of entry into force will have to comply by the beginning of the financial year following 6 months from thedate of entry into force
The ESMA guidance may be found at Guidelines on performance fees in UCITS and certain types of AIFs.
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