The FMA has published the findings of its review of quarterly fund updates, which examined whether fund managers are meeting the legal requirements to produce easily locatable and easily understandable updates to investment clients.
Quarterly fund updates are designed to provide investors with important information about their managed fund including how it’s performing, any costs incurred and what the fund is investing in.
There is a legal requirement to follow a standard format which makes it easy to compare funds, and makes it easily understandable to non-expert investors.
At least one quarterly fund update from each licensed Managed Investment Scheme (MIS) manager was considered as part of the review. Quarterly fund updates are a relatively new requirement for MIS, and completed their first year in 2017.
The key aims of the review were to establish whether there were any common themes or issues where guidance should be sought, any instances of non-compliance, emergent areas of interest or any other matters which might inform fund compliance monitoring throughout 2018.
Findings revealed that MIS managers were complying with the obligation to produce fund updates, and the majority of updates did not raise any major concerns.
However the review did find a number of areas where disclosure could be improved, and also uncovered some instances of potential non-compliance. In some cases the update could not be found on the issuer’s website, and in other cases it was not easily accessible.
In terms of charges, the majority of updates did not report fund charges significantly higher than the estimates offered in the product disclosure statement; however, four funds did display a significant difference.
FMA regulations set out a thorough definition of how updates should be publically available, and the FMA says there is a ‘clear expectation that fund managers should get this right.’ It also states that it is ‘committed to further work and engaging with MIS managers to address these issues.’