Knowledge Base
Explain the differences between the UCITS KIID and the PRIIPs KID
What methodology is used to calculate the SRRI in the UCITS KIID?
The SRRI in the UCITS KIID is based solely on historical volatility, calculated as the annualised standard deviation of weekly returns over five years. A stability rule requires that the SRRI only changes if the calculated level differs for more than four months.
What is the main scope of application of the UCITS KIID compared to the PRIIPs KID?
The UCITS KIID applies exclusively to UCITS within the meaning of Directive 2009/65/EC and to AIFs accessible to the general public, while the PRIIPs KID covers a broader range of investment products, including UCITS, AIFs, unit-linked life insurance, structured products, SCPIs and structured deposits. This difference reflects the European Commission's desire to harmonise pre-contractual information to enable comparability between products of different types.
What is the main criticism of PRIIPs scenarios during a prolonged bull market?
During a prolonged bull market, even the unfavourable scenario in the PRIIPs KID may show gains, creating a misleading impression of safety. This may mislead investors by giving them a false impression of stability.
The SRI in the PRIIPs KID combines only market risk.
The SRI in the PRIIPs KID combines market risk and credit risk. Market risk is calculated using VaR-equivalent Volatility at 97.5 percent over the recommended holding period, while credit risk incorporates agency ratings according to a correspondence matrix.
The KIID may be maintained for the information of professional clients even after the mandatory application of the PRIIPs KID.
According to AMF Position DOC-2011-05, February 2023 version, the KIID may be maintained for the information of professional clients even after the mandatory application of the PRIIPs KID. However, for non-professional clients, the PRIIPs KID replaces the KIID.
Main risk indicators
Click to see answer
The UCITS KIID uses the SRRI (Synthetic Risk and Reward Indicator), which is based on historical volatility, while the PRIIPs KID uses the SRI (Summary Risk Indicator), which combines market risk and credit risk.
From what date has the PRIIPs KID been mandatorily applicable to all UCITS and AIFs open to retail investors?
The transitional regime ended on 31 December 2022. Since 1 January 2023, the PRIIPs KID has been mandatorily applicable to all UCITS and AIFs open to retail investors.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Costs presented in the UCITS KIID
Costs presented in the PRIIPs KID
The UCITS KIID presents entry and exit fees, ongoing charges or TER and outperformance commissions. The PRIIPs KID displays total costs in euros and as a percentage of annual return with a breakdown distinguishing one-off costs, recurring costs including management and transaction costs, and incidental costs.