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2011 Investment Fund Act implements EU UCITS IV Directive

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The 2011 Investmenfondsgesetz (Investment Fund Act; InvFG 2011), which enters into force on 1 September 2011, implements EU Directive 2009/65/EC in relation to Undertakings for Collective Investment in Transferable Securities (UCITS IV) in Austrian legislation. The Act is a thorough overhaul of the 1993 Investment Fund Act (InvFG 1993). “The implementation of this EU Directive plays a key role in further developing the fund market in the European Economic Area and in improving consumer protection in this area,” explained FMA Executive Director Helmut Ettl. Ettl also provided a few key figures to underline the importance of the Austrian investment fund market. These show that Austria’s 24 investment fund management companies currently operate 2,251 investment funds. An additional 5,587 foreign investment funds are licensed for distribution in Austria. As at the end of 2010, the total assets under management by Austrian investment fund management companies amounted to €145.2 billion.

Ettl drew particular attention to the fact that the new Act gives consumers access to more information, greater rights and new products. For example, the existing “Simplified Prospectus” will be replaced by a new “Key Investor Information (KII) document”, following a transition period lasting until 30 June 2012. Comprising a maximum of two A4 pages (three in the case of complex products), the KII document is standardised throughout Europe and must contain all of the key facts about the fund, i.e. objectives and investment policy, risk and reward profile (risk assessment based on a predefined scale from 1 to 7), costs and charges, past performance, and practical information such as the custodian bank, point of contact for investors, tax information, etc. In addition, all management companies are obliged to set up a complaints management process. In the case of complex procedures, such as fund mergers, the requirements to provide information directly to unit holders have been expanded.

The Act also provides significant relief for companies that offer investment funds. This includes a new European “Management Company Passport”, which now allows management companies to issue funds directly in other Member States according to local laws, in line with the freedom to provide services. Cross-border fund mergers have been simplified, and the procedures for notifying distribution of funds in another Member State have been streamlined. However, management companies now also face increased organisational requirements, in particular in relation to risk management and handling conflicts of interest.

“The new Investment Fund Act also represents a major challenge for us as supervisors. We have to ensure the increased levels of consumer protection are upheld, while greater opportunities for cross‑border transactions will demand more intensive cooperation with authorities in other countries. We are well equipped to meet these challenges,” declared FMA Executive Director Helmut Ettl.

Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516

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