Several independent boards of Baillie Gifford’s investment trust clients have written to the FCA about concerns with new Priips key information document rules.
Baillie Gifford’s concerns relate to disclosure rules for the documents. It says these are based on past performance and could lead to investors being misled.
Baillie Gifford compliance and legal partner Graham Laybourn says: “Such is the concern of this new KID disclosure, we have seen the independent boards of a number of our investment trust clients writing directly to the FCA.”
He adds: “We fully support the views expressed by our investment trust directors that these mandated performance scenarios have the potential to set unreasonable expectations when being read by our retail investors.”
Earlier this month, analyst Numis Securities also raised concerns that the KID could be misleading for investors.
Numis said advisers must use common sense when selecting investment trusts through the new Priips’ Key Information Document as it could be misleading for investors.
Baillie Gifford investment trust manager James Anderson says the business is “disturbed” by the requirements of the KID.
Anderson, who manages the Scottish Mortgage investment trust, says: “We do not believe that reliance on past performance data is ever a sufficient guide to the many possible future outcomes in stocks and markets.”