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Three in 10 large equity funds are failing to provide investors with disclosure information required under EU law that allows them to compare funds and make informed decisions.
Investor rights group Better Finance said that of 2,033 funds marketed across Europe that it examined, 619 were in breach of were in breach of one or more of their legal obligations. Of these 98 were deemed 'major offenders', by failing to publish past performance of their benchmarks in key investor information documents (Kiids).
The problem was just as bad among funds labelled 'closet trackers'. These are funds that purportedly offer active management and charge accordingly, but according to Better Finance's offer performance that does not differ markedly from that of the index.
Of the 165 funds Better Finance deemed to be closet trackers, 44 failed to properly disclose performance of this benchmark.
They include funds run by asset management giants such as Fidelity International, Standard Life Aberdeen, and Janus Henderson.
‘These persistent, widespread, and clear breaches of EU investor protection rules…as evidenced by this research are yet another call on EU public authorities to urgently and adequately stop this ongoing detriment to EU citizens as savers and investors,’ said Guillaume Prache, managing director of Better Finance.
The eight Fidelity funds account for more than $3.1 billion (£2.3 billion) of investors’ money. This includes the $911 million Fidelity Asean fund and $759 million Fidelity Greater China fund.
Four Janus Henderson funds made the list, including two multi-billion fund giants. Janus Henderson Continental Europe has €3.2 billion (£2.8 billion) under management, and Janus Henderson Horizon Global Technology houses $2.9 billion.
A spokeswoman for Janus Henderson said: 'We include benchmark data on our Kiids when they are named in the objective and policy, as the rules prescribe, and performance against comparator/reference index is clearly shown on our website and fund factsheets for the four funds mentioned and across our wider product range.'
The $274 million Aberdeen Standard Life Japanese equities fund also made Better Finance’s list.
A spokeswoman for Aberdeen Standard Life said: ‘We are clear that our actively managed funds are just that: actively managed and are certainly not run as closet trackers.
‘For our actively managed funds, we are at pains to ensure that the positions we take reflect the risk-reward criteria that clients should reasonably expect and we use tools such as active share and tracking error to monitor that.’
She added that all Kiids were ‘aligned with current regulations’ but ‘we recognise that we can continually evolve our levels of disclosure and expect to do so during the process of integrating our heritage businesses over the next few months’.
Fidelity had not responded at the time of going to press.
The list of funds identified by Better Finance as closet trackers, which also failed to disclose benchmarks in documentation, is below:
|Barings Latin America||MSCI EM Latin America 10/40|
|Belfius Equities Global Finance||MSCI Europe/Financials|
|Belfius Equities Global Healthcare||MSCI World/Healthcare|
|Belfius Equities Robotics and Innovative Technology||MSCI World/Information Technology|
|Candriam Equities Emerging Markets||MSCI Emerging Markets|
|Candriam Equities Europe||MSCI Europe|
|Candriam Germany||MSCI Germany|
|Candriam Equities Switzerland||MSCI Switzerland|
|Candriam Equities UK||MSCI UK|
|Candriam Quant Equities Europe||MSCI Europe|
|DekaLux-Europa||MSCI Europe Large|
|Deka-Europe Value||MSCI Europe|
|Fidelity American Diversified||S&P500|
|Fidelity Asean||MSCI South East Asia|
|Fidelity Global Healthcare||MSCI All Companies World Index Healthcare|
|Fidelity TeleComs||MSCI All Companies World Index Telecom Services|
|Fidelity Greater China||MSCI Golden Dragon|
|Fidelity International||MSCI World|
|Fidelity Malaysia||MSCI Malaysia|
|Franklin US Equity||S&P500|
|FT Frankfurt-Effekten-Fonds||MSCI Germany|
|Janus Henderson Continental Europe||MSCI Europe ex UK|
|Janus Henderson Latin American||MSCI EM Latin America|
|Janus Henderson Horizon Global Technology||MSCI All Companies World Index Information Technology|
|Janus Henderson Intech Core||S&P500|
|JSS Real Estate Equity Global||S&P?Citigate World Property|
|Legg Mason US Appreciation||S&P500|
|Metzler Aktien Deutschland||MSCI Germany|
|Mirabaud Equities Swiss Small & Mid||SIX SPI Extra|
|PineBridge Greater China Equity||MSCI Golden Dragon|
|Russell US Equity||Russell 1000|
|Russell US Quant||Russell 1000|
|Sanlam World Equity||MSCI World|
|SEI GMF Pacific Basin ex Japan||MSCI Pacific ex Japan|
|SLI Japanese Equities||MSCI Japan|
|UniEM Osteuropa||25% MSCI GCC Countries and 75% EM Europe & Middle East|
|UniEuropa Net||MSCI Europe|
|UniSector: BioPharma||MSCI World Healthcare|
|UniSector: HighTech||MSCI All Companies World Index Information Technology|
|UniValueFonds: Europa||MSCI Europe Value|