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Letters sent to FCA from boards of Baillie Gifford trusts over misleading KIDs

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.”



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I must admit I do find this requirement ironic given the “past performance is not a guide to future performance” warning that’s been present for multiple decades now.

  2. I am sure that this will not be the last letter the FCA receive John Kay in this weekend FT outlined the same concern
    But the bureaucrats in Brussels know best and would not take the slightest notice of a investment trust or the experience of it’s management that was established in 1909

  3. Richard Lovegrove 22nd January 2018 at 5:45 pm

    The KIIDs do not in reality offer the best advice to retail clients on investments such as Scottish Mortgage. It highlights the complete lack of understanding by the Regulators

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