Key Investor Information Document (KIID)
Amendments to the Collective Investment Schemes Ordinance
Responding on the development in the European environment, the Federal Council of Switzerland has enacted an amendment to the Collective Investment Schemes Ordinance (CISO). The amendments entered into force on July 15, 2011 are aimed at improving the comparability of information for investors and ensuring an appropriate protection of investors.
The amendments of the CISO refer to the implementation of the KIID on a Swiss level and regulate the transition periods. The implementation of an information document is not a new act. The prospectus and the simplified prospectus were already part of the Collective Investment Schemes Act (CISA). However, the key elements of the amendments are the introduction of detailed provisions regarding the content and length of the information document.
Content and structure of the KIID
The KIID is not advertising material but a mandatory fund document. In form and content, the Swiss KIID adopts the significant provisions of the European KIID.
Compared to the simplified prospectus according to old Annex II CISO, important amendments have been made:
- Pursuant to para 7.1 of the Annex III CISO the KIID may only cover 2 pages respectively 3 pages for structured funds. Due to the mandatory length restrictions, the investor shall only be provided with the information that is essential to make an investment decision.
- By the use of a standardised and predefined form the KIID discloses in simple and plain language the nature of a collective investment scheme and the inherent risks. As a result the comparability of different products will be enhanced.
- The Synthetic Risk and Reward Indicator (SRRI) visualizes the risk and return profile of a collective investment scheme by an indicator (number between 1 and 7) and allows a quick assessment of the inherent risks compared to the potential return.
KIID contains the following sections: „Title and content of the document“, „Investment policy and investment strategies“, „Risk and return profile“, „Costs“, „Previous performance“ and „General information“.
Existing Swiss securities funds and other funds for traditional investments have to issue a KIID at the latest by July 14, 2014. Swiss funds which get the approval before July 15, 2012 may either issue a KIID or a simplified prospectus. At the latest by July 14, 2014, these funds have to issue a KIID.
These rules apply analogously for foreign collective investment schemes that are comparable with Swiss securities funds or other funds for traditional investments.
How can we support our clients?
Fund management companies and SICAVs will be forced to transform the existing simplified prospectus respectively to issue a new KIID. The collection of the necessary, partly historical data might be challenging. Existing processes must be reviewed and eventually adjusted. We will support by:
- providing an impact analysis, i.e. an assessment if and how a fund management company or a SICAV is affected, and preparing proposals for solution.
- implementation of modification proposals.
- employee training; understanding of the KIID requirements and becoming familiar with the concept of the Synthetic Risk and Reward Indicator.