ESMA Guidelines on performance fees in UCITS and certain types of AIFs


On 3 April 2020, ESMA eventually released its much-anticipated final report on guidelines on performance fees in UCITS and certain types of AIFs, including the guidelines themselves (the “Guidelines”).

As a reminder, these Guidelines aim at harmonising the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid and are disclosed to investors of investment funds falling within the scope of the Guidelines. The common requirements will allow convergence on the supervision by competent authorities of performance fees models across the European Union.


The Guidelines apply to (i) all UCITS and (ii) open-end AIFs marketed to retail investors in accordance with Article 43 of the AIFM Directive (the “Funds”) in order to ensure a level playing field and a consistent level of protection to retail investors. The Guidelines do not apply:

  • to closed-ended AIFs; and
  • to open-ended AIFs that are EuVECAs (or other types of venture capital AIFs), EuSEFs, private equity or real estate AIFs.

Entry into force

On 5 November 2020, ESMA issued the official translations of the Guidelines which means that the Guidelines will enter into force two months after this publication date, i.e. 6 January 2021 (the “Application Date”).

The Guidelines will apply immediately to new Funds created after the Application Date, and to any existing Funds implementing a performance fee for the first time after the Application Date.

Funds with a performance fee existing prior to the Application Date should comply with the Guidelinesas of the financial year following six months from the Application Date (i.e. after 6 July 2021), thereby giving the Funds and their managers a timeline for compliance. This means that for Funds having the calendar year as their financial year, the Guidelines will apply as of 1 January 2022.


Adoption of the Guidelines by the CSSF will require the Funds and their managers to review their performance fee models and, if deemed necessary, adapt them in light of the Guidelines. Similarly, the disclosure requirements laid down by the Guidelines will need to be taken into account and implemented when reviewing the relevant fund documentation (e.g. prospectuses and KIIDs).

For a practical assessment of the impact of the Guidelines on your Fund, please do not hesitate to contact us.