Supervision release 2 May 2013 – 37/2013

Key Investor Information Documents (KIID) of Finnish investment funds – some improvement in clarity still needed

Finnish investment funds' key investor information documents generally meet the requirements. But many management companies still need to make improvements, inter alia, as regards the clarity of the description of investment policy.

Description of investment policy

The description of a fund's investment policy should state in a clear and comprehensible manner how and where the fund invests its assets. The focus should be on the actual nature of the fund's investments at given times. Descriptions should hence not be overloaded with details of what all the fund is allowed to do under its rules and regulations.

The description of investment policy is not yet sufficiently clear and accurate in all the examined key investor information documents. In some key investor information documents, the description of investment policy includes terms that are often unfamiliar to consumers as well as inaccurate means of expressions.

Recommended holding period

Management companies must also pay attention to the recommended holding periods presented in the key investor information document.

Some management companies do not state the holding period using the wording of the European Commission's Regulation. Moreover, many management companies had recommended a five-year term for holding units in equity funds, irrespective of the markets in which the fund invests.

In FIN-FSA's view, the recommended holding period should be based on a fund-specific documented risk assessment and it should realistically describe the fund-specific risks. Based on the recommendation, the customer should get an idea of the length of time he should be prepared to wait for the investment's risk and reward profile to reach a reasonable level with sufficiently high probability.

FIN-FSA urges management companies to conduct fund-specific examinations and assessments of the applicability of their recommended holding periods in light of the markets in which their investment funds are investing.

Risk and reward profile

In their descriptions of the risk and reward profiles in key investor information documents, many management companies also describe risks that are not necessarily relevant for the specific fund. Management companies should in future keep in mind the fact that in this section focus should be on the risks that are material to the fund's investments.


In the Charges section of the key investor information document, many management companies mention the TER (total expense ratio), which was used in simplified fund prospectuses, whereas in the key investor information document this was replaced by the ongoing charges ratio. The TER is not part of the key investor information document; the only ratio to be used in the key investor information document is the ongoing charges ratio.

FIN-FSA recommends that management companies use the ongoing charges ratio also in a fund's prospectus and marketing material.


FIN-FSA considers it important that management companies study the findings and FIN-FSA's views on the matter and where necessary, update their key investor information documents.

For further information, please contact

Antti Lampinen, Market Supervisor, tel. +358 10 831 5518 or antti.lampinen(at)


Findings of the Survey