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UCITS: Key Investor Information Document (KIID) and the SRRI Calculation

Aug 26, 2013 Stephen Berei

What is it?

In reaction to the current financial crisis throughout Europe, there is a strong drive to provide clearer information about investment products to investors. The "KIID" 2-page factsheet document replaces the Simplified Prospectus, in which the UCITS IV legislation has required all investment companies to provide to investors prior to any investments made.
 
The document must be written in simple language in line with the Prospectus. There is a long list of mandatory information that must be included in the document. It is required for every share class. According to an article in the Financial Times on December 19th, it’s currently been tough for the writers of these pieces to use simple language rather than technical terms and jargon. Experts say it may take some time for the writers to adapt to the plain descriptive language that must be used in these documents.

One major feature included in the document is the Synthetic Risk & Reward (SRRI) calculation. This calculation is based on the volatility of the fund. For market funds, the calculation uses annualized volatility of the total returns over the past 5 years. The NAV returns are based on weekly values, and where they are not available, the monthly NAVs would be used. For strategic funds, there is a slightly different calculation. There are 7 SRRI Categories that correspond to the Volatility Range for the fund. These are below.
 

How is the SRRI calculated (Market Funds)?

 

You can find more detailed information on the KII Document here and the SRRI calculation here.

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