Dossier spécial Fund Forum 2011

Fund administrators offer a complete ready-made KIID solution

le 23/06/2011 L'AGEFI Hebdo

From data collection to the distribution of the key investor information document, these service providers are offering fully integrated solutions for the production of this new compulsory document.

The KIID (key investor information document) will enter into force on 1st July 2011 for all coordinated UCITS subject to the UCITS IV Directive. The KIID will therefore gradually replace the simplified prospectus by combining, in a standardized format at European level, the main information regarding the fund. UCITS products launched from 1st July must comply with this standard, but for pre-existing products the regulation contains a "grandfather clause", which grants a one year transitional period to asset management companies, up to 30 June 2012, to produce a KIID for all their products.

"The challenge lies in the volumes to be handled: for one fund, it will be necessary to produce a KIID per category of unit and per country of distribution, that is to say sometimes dozens of KIID documents", points out Raphaël Tridemy, Head of Business Development and International Projects at EFA France. As an extension of their range of services, fund administrators are offering their asset management clients a complete ready-made KIID solution.

Small and medium-sized management companies that do not have the necessary in-house resources are the natural clients for these solutions. However, some large asset management companies are also choosing to outsource their KIID production to their fund administrator. For example, Axa IM announced in March that it had signed a contract with State Street Global Services. "We offer a ready-made solution, including for funds not administered by us: we collect and process the data, produce various statistics, create the document, translate it and distribute it, as well as carrying out the necessary controls at each of these stages", specifies Laurent Vidal, Head of Business Development at State Street Global Services.

Data provisions services

Other service providers are placing the emphasis on a customised approach, letting the client to choose between a ready-made solution and simply a data provision service: "The KIID will provide fund administrators with an additional source of income, but will not in itself constitute a truly differentiated offer: all fund service providers will offer it, notes Laurent Durdilly, Head of Product Development at Caceis. What will make the difference, on the other hand, is the degree of flexibility, how far the offer is customised." It is the same story at EFA: "Our offer is adjustable, confirms Raphaël Tridemy. Some clients purchase only the data calculation - ongoing charges, SRRI (synthetic risk and reward indicator - read page 27), etc. -, while others want us to produce their KIID, translate it and distribute it." The cost, directly linked to the volume of KIIDs produced, obviously depends on the level of service chosen.

Although only a minor issue in principle, the KIID translation into the language of each country where the fund is distributed is, in practice, a serious constraint. "In 2010, we developed a partnership with an international firm of translators, notes Nathalie Collot, Product Manager at Caceis. Since then, we have put in place automated flows between our two firms. Good translators are already snowed under with work and fund administrators that have not reacted quickly enough will have difficulties finding them." Asset management companies have become involved in a race against the clock in recent months.

Mots fund administrators launched their KIID production service in the last months of 2010, but their clients have not all fully realised the scope of the task. "Large asset management companies will switch from the simplified prospectus to the KIID in several waves, starting for some products in July 2011, notes Nathalie Collot. Other firms are adopting a more wait-and-see approach, as they are relying on the one year transitional period before switching to the KIID."

"Grandfather clause"

But this "grandfather clause" does not exist in Germany: all German funds will have to switch to the KIID from 1st July 2011, with indirect consequences on the market as a whole. "Foreign asset management companies marketing funds in Germany tend to accelerate the changeover of their funds to the KIID, since local products will have already adopted this standard, notes Laurent Vidal. We have also noted a trend among German asset management companies to adopt the KIID with effect from 1st July, not only for their German funds since it is compulsory, but also for their funds incorporated in Luxembourg or elsewhere in order to harmonise their products." As regards fund administrators, they welcome the fact that some clients prefer to take their time to produce their KIID since this enables them to stagger this titanic task over time. Caceis estimates that it will have to produce 5,000 KIIDs for its clients over the coming months. Once the changeover has been made for existing funds, they will then have to "service" these KIIDs by updating them at least once a year, if not more frequently. 

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