On 30 May 2017, the Association of the Luxembourg Fund Industry (ALFI) issued its second version of the Q&A on the Key Investor Documents (KIDs) for Packaged Retail and Insurance-based Investment Products (PRIIPs).
Please see our article ‘ALFI Issues Q&A on PRIIPS KIDs’, for an overview of which funds are affected by Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for PRIIPs (PRIIPs Regulation) as well as selected topics from the first version of the Q&A.
Below, you will find some of ALFI’s updates to the Q&A.
Reserved Alternative Investment Funds (RAIFs)
As a preliminary note, our aforementioned article had included references to reserved alternative investment funds (RAIFs) and explained how certain provisions of the Q&A would apply to RAIFs, even though the Q&A itself only included references to specialized investment funds (SIFs), investment funds in risk capital (SICARs) and undertakings for collective investment that are subject to Part II of the Luxembourg law of 17 December 2010 on undertakings for collective investment, as amended (Part II Funds). In the second version of the Q&A, ALFI has added references to the RAIFs to remove any doubt.
Use of a KID by UCITS
Undertakings for Collective Investment in Transferable Securities (UCITS) that were authorised pursuant to Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to UCITS, as amended, are exempt from the obligations under the PRIIPs Regulation until 31 December 2019.
ALFI confirmed that a UCITS may not waive this exemption to issue a KID instead of the key investor information document which is required for UCITS (‘UCITS KIID’).
Per the PRIIPs Regulation, the KID must be published on the PRIIP’s manufacturer’s (i.e., the fund) website. ALFI believes that the KID may be made available on websites other than the fund’s if the fund includes links on its website to those external websites.
Cross-references to the prospectus
ALFI notes that the KID must include all key information. Therefore, cross-references to the prospectus should not be used as a substitute for that requirement. Finally, cross-references should only be used for information that must be included in the KID.
Definition of key terms
Unlike for the UCITS KIID, the PRIIPs Regulation does not require that key terms be defined. However, ALFI indicated that key terms may be defined to comply with the requirement that simple language be used in the KID.