Date: 4th June 2018

Renewed research by BETTER FINANCE finds that at least 30% of the main actively managed UCITS equity funds (those with a ‘fund benchmark’) still do not comply with key disclosure requirements for benchmarks as stipulated in EU Rules. In the face of persistent poor enforcement in our view in some major fund domiciles, BETTER FINANCE sees no other way but to name the perpetrators and failing jurisdictions it identified.

What started as an investigation into the widespread mis-selling practice known as “closet indexing” (claiming active fund management, whilst in reality merely tracking an index) has now taken on a new dimension. When it replicated the study into closet indexing by the European Securities and Markets Authority (ESMA) in 2017 (and, unlike ESMA, disclosed the names of the 165 UCITS equity funds that were identified according to ESMA’s methods as “potentially” falsely active) BETTER FINANCE regrettably also discovered widespread breaches of key EU disclosure rules for investors. BETTER FINANCE immediately brought this worrying issue to the attention of EU regulators, only to find that more than one year later these violations of EU fund key disclosure rules still endure.