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03.05.2018 13:15 Age: 228 days
Category: News

Economic Prediction – Astrology`s Less Reliable Cousin?

2018 saw the start of the implementation of the packaged retail and insurance-based investment products (PRIIPs) regulation, imposing a new standardized information document (KID) to parties providing investment products. BETTER FINANCE, ahead of the curve, was quick to point out the inconsistency between MiFID II`s rejection of future performance based on past performance, and the PRIIPs` required publication of four scenarios indicating future performance (based on past performance). Keeping the words of Stanford Professor Ezra Solomon in mind - "the only function of economic forecasting is to make astrology look respectable" - BETTER FINANCE sees future performance scenarios as highly misleading. 

Not alone in voicing such concern, BETTER FINANCE was joined by UK FCA Chief Mr. Andrew Bailey last week. At  the LSE`s Annual Asset Manager Conference Mr Bailey warned against the PRIIPs regulation, claiming that in addition to concerns over future performance estimates in KIDs, the regulation could lead to funds pulling out of Europe – claiming to already have evidence of such an effect. 

BETTER FINANCE has repeatedly called for a review of the PRIIPs regulation and its reliance on future performance estimates, and welcomes the remarks of Mr. Bailey as presented in a recent article published by Funds Europe. 

To read BETTER FINANCE`s original article: Trouble with the new “KIDs” on the block in 2018...


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