Fund Distribution Alert 2022-13

On 28 April 2022, the Swedish Investment Fund Association announced that new industry standards were agreed with the Swedish Consumer Agency on the matter of fund marketing. The standards, which are issued as an agreement between the fund body and the government entity, were updated partly to confirm and align the existing version with the new ESMA guidelines on marketing communications.

Additionally, further requirements, which differ from the ESMA guidelines, was provided on past performance, risk information, and fees.

• On past performance, the following changes were made:
  • the industry standards specifically allow for complementary use of quarterly data for the current year, as long as performance based on complete 12-month periods is featured.
  • previous time recommendations for various products were removed.
  • if past performance is present, this is considered as a benefit, meaning risk information must be shown in an equally prominent manner.
  • the industry standards allow for simulated past performance of new funds, as long as the simulation is based on a referenced benchmark or target rate of return.
• Regarding risks, the industry standards previously included a request to indicate that any investment involves a risk. For shorter messages, the inclusion of the following warning should now be shown prominently: ”Investeringar innebär en risk” (“Investments involve a risk”, in English). For longer communications and communications featuring past performance, the previously specified risk warning should continue to be used.
  • It is specified that for shorter messages, such as social media, the shorter risk warning is sufficient.
• The industry standards on fees now specify that the management fee cannot be indicated alone. Ongoing charges is referenced as a more important measure and entry/exit charges should be indicated as well. Should fees be indicated in a currency other than SEK (and not e.g. in percentage form), this currency is to be specified and a warning of the effect of currency fluctuations must be included.

The industry standards, which go further than EU rules, are part of the self-regulation maintained by the Swedish Investment Fund Association and while not directly applicable to foreign funds, they are generally considered “good practice” in Swedish law.

The updated industry standards are applicable in Sweden as of 1 May 2022.

The new agreement can be accessed in full here (PDF | 3.3MB) and the updated consolidated industry standards can be accessed in full here (PDF | 0.3MB) (both only available in Swedish).

Please feel free to contact us should you require any additional information.

Partner
+352 22 51 51 7892
said.fihri@kpmg.lu

Director
+352 22 51 51 7271
stephanie.zedda@kpmg.lu