Investment Funds Update - Europe: Legal and regulatory updates for the funds industry from the key asset management centres and primary European fund domiciles: March 2016 - Issue 3: Germany

by Dechert LLP
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UCITS V Implementation Act Enters into Force

The act to implement the UCITS V Directive (Directive 2014/91/EU) in Germany (“Gesetz zur Umsetzung der Richtlinie 2014/91/EU des Europäischen Parlaments und des Rates vom 23. Juli 2014“) will enter into force on 18 March 2016. However, transitional provisions have already entered into force on 11 March 2016, on the basis of which BaFin is now competent to officially approve of fund rules for German UCITS which were amended in light of UCITS V.

BVI Publishes Sample Fund Rules for UCITS

The German Investment Fund Association (BVI) has published its updated sample fund rules for German UCITS which are in accordance with the requirements of the UCITS V Directive and were drafted in co-ordination with BaFin.

BaFin Examines Credit-Linked Notes and Closet Index Tracker Funds

BaFin published on its website on 4 March 2016 that it is investigating the extent to which credit-linked notes are being actively sold to retail clients and whether such clients receive sufficient explanation of the risks involved. To this end, BaFin sent a market-wide survey to issuers of credit-linked notes. Among other things, the survey covers the scope of the credit-linked notes issued, the size of the average coupon and the origin of the credit risks used in the structuring. BaFin has also written to around 100 companies selected as an initial sample and asked them about the sale of these products. BaFin expects to complete the investigation by the end of 2016.

BaFin is also investigating so called “closet index tracker” funds, i.e., a fund whose fund management claims in the fund’s investor information documentation and fund rules to manage the fund actively while the fund is, in fact, staying very close to a benchmark and therefore implementing an investment strategy which requires less input from the investment manager. According to market sources, Bafin has written 100 fund managers in Germany in order to investigate the matter.

Investment Statistics as of 31 January 2016

The German Investment Fund Association BVI issued its latest investment statistics report dated 31 January 2016, giving an overview of the net assets and net sales within the German investment fund and asset management markets. The statistics are broken down by asset class and provider. They provide information on net assets and net inflows of investment funds and assets outside investment funds.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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