I spent a few hours this week reading a wonderful, mind-boggling piece of literature called “Commission Delegated Regulation (EU) 2021/2268 of 6 September 2021 amending the regulatory technical standards laid down in Commission Delegated Regulation (EU) 2017/653”. Given that the asset management industry has less than four months left to adjust to the new KID PRIIPS format, it’s one of this summer’s best-sellers and I truly recommend it, but it left me with one question.
We are all familiar with the regulatory principles, which require that any investment manager, who vaguely mentions performance data in a document, should systematically include a disclaimer to remind everyone that “Past performance should by no means be considered as a valid indication of future performance”.
Why, then, do the same regulators, who issued that requirement, also ask investment managers to calculate a risk indicator and run stress-tests / performance scenarios based on historical performance data, and make their results a core component in the new KID PRIIPS for retail investors ?
HG – September 15, 2022