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Big equity funds fall short on benchmark data

Big equity funds fall short on benchmark data

by Michelle McGagh Jun 04, 2018 at 15:07


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: 

Fund Benchmark
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
DekaLux-USA S&P500
Fidelity American Diversified S&P500
Fidelity Asean MSCI South East Asia
Fidelity Australia S&P/ASX200
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 MSCI Europe
UniEuropa Net MSCI Europe
UniNordamerika S&P500
UniSector: BioPharma MSCI World Healthcare
UniSector: HighTech MSCI All Companies World Index Information Technology
UniValueFonds: Europa MSCI Europe Value
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Comments  (3)

  • Law Man: 

    Useful to have the list of closet trackers. Fortunately I do not hold any (and there are others).

    I am a little mystified by the MiFiD information disclosed. I am relying on the total transaction costs shown by HL, this being (to me) the most important information. I hope it is accurate.

    17:16 on 04 June 2018

  • Tony Airey: 

    On balance, I was a Bremainer - but I can see why people voted to be free of this unelected and misguided bureaucracy.

    However, if they can smoke out the closet trackers.....

    20:51 on 04 June 2018

  • mc2: 

    It's very scary you invest long term in what you think it's an active fund and wake up one day 20 years later and find out it was a tracker all the time...

    This should be clearly illegal and prosecutions brought against the deviants ASAP.... KIIDS must spell OUT in bold letters what kind of fund it is AND IT'S fraud if turns out anything different...Of course finance regulation from EU has always been attacked as bureaucratic by British based funds providers - now you can see why

    02:54 on 05 June 2018

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