The UCITS IV Directive is being implemented on 1st July 2012 and introduces something called the Key Investor Information Document (KIID).
The KIID is designed as a concise document to deliver key information about the fund.
Each KIID is divided into five sections:
-Objectives and investment policy
-Synthetic risk and reward profile
-Charges
-Past performance
-Practical information
Looking through these newly required KIIDs, there are a few important points to note.
In the charges section, the charges described represent the maximum charges that can be levied by the fund. These might be higher than the charges our clients will actually experience.
This is the result of our transparent approach to charging, where we always disclose the cost of fund management, platform administration and advice as three separate charges, rather than hiding them as a single set of charges.
The risk and reward profile of each fund has prompted some interesting debates within the IFA community.
These KIIDs use a risk scale of one to seven, where one is lower risk and seven is higher risk. This scale is unlikely to precisely match other descriptions of investment risk and reward.
By including a risk measure that is based on volatility, the KIID risk scales ignore other important risks such as exchange rates, although they do point these out separately.
What is more important than the volatility of an individual fund is the overall risk profile of a portfolio, once a set of differently correlated funds are blended together to create a risk profile suitable to meet the objectives of an individual investor.
In order to meet our commitment to the environment, we have carefully considered the UCITS IV Directive and decided to make KIIDs available to our clients online, rather than routinely print and post each document.
Therefore, we will be referring our clients to this website page each time we recommend a new investment, top-up an existing investment or recommend a fund switch.
We will of course be happy to make printed copies of any KIID available to our clients on request.
Our website page will be updated regularly with links to the latest KIID for each of the funds within our model portfolios, as well as other frequently recommended funds.
You should speak to your Informed Choice Financial Planner with any queries about KIIDs.
Photo credit: Flickr/Bohman
