In return for a positive performance of the portfolio management function, investment fund managers frequently charge a performance fee to the investment funds they manage. In this respect, discussions have taken place, also involving national financial supervisory authorities, about the balance between such performance fee and investor protection rules. As a consequence, the European Securities and Markets Authority (“ESMA”) reviewed current performance fee models and recently issued final guidelines for the purpose of harmonizing the interests of fund managers and investors, which apply from 6 January 2021.
On 5th November 2020, ESMA published its guidelines on performance fees in UCITS and certain types of AIFs on its website (“Guidelines”), translated into all official languages of the member states of the EU. The final report on the Guidelines had already been published by ESMA on 3 April 2020 and since that date, Luxembourg investment fund managers expected the publication of the translated Guidelines in order to know when they would enter into force, which would be two months following their publication.
During this two-months transition period, the CSSF has to declare to ESMA if in Luxembourg, it will comply with the Guidelines, which the regulator is expected to confirm.
The article is available for download as a PDF file; the whole edition is free to access on the AGEFI website.