Last year, BaFin identified transparency deficits in its investigation of closet indexers. It has now published a decision stating which information must be contained on the investment prospectuses of investment funds.
Capital management companies have to explicitly state whether they are actively managed or only replicate an index. If the fund uses a reference value (benchmark), it must be named in the information documents and clearly indicate whether, and to what extent, the fund has outperformed or underperformed its benchmark. A comparison between of the respective fund and its reference value used over a longer period should also be illustrated via a chart in the sales prospectus.
Until the end of January BaFin consulted stakeholders on the planned publication. Unlike in the draft version, the final version of the transparency standards does not only apply to public funds, with a minimum active share of 51%, the obligation also applies to funds with a strong investment in shares as detailed in their sales prospectuses. The transitional period, which was originally set until 30 June 2017, has also been extended to 31 December 2017 by the supervisory authority.
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