FundAssist complete research on future SRRI trends and their effect on published KIIDs

26/06/2013 - 11:30

Mario Draghi in a recent major position paper on the future of the Euro currency emphasised the need for stability through change. It is ironic therefore that should the relative stability experienced in the securities markets since the turbulent times of Q4 2008 continue, a consequence may be the potential wholesale regeneration of published KIIDs in late 2013/early 2014, a clear case of change through stability.

Once the extreme volatility encountered during the 2008 crash winds its way out of the standard five year market volatility calculation, the results of the calculation may be markedly different. This may result, in a significant number of cases, in a requirement to amend the SRRI number and re-issue the KIID.

The following table illustrates the potential for change:

Fund Type % of annualised 5 years volatility due to Q4 2008* Most Common Current SRRI Most Common Expected SRRI Emerging Market Equity 33-40% 7 6-7 European/US Equity 25-33% 6-7 5-6 UK Equity 33-40% 6-7 5-6 Asia Pacific Equity 20-25% 6-7 5-6 Emerging Market Bond 33-40% 4-5 3-4 Global High Yield Bond 33-40% 4-5 3-4 European Bond 20-25% 3-4 3 GBP/US Bond 15-20% 4 3-4

* mid-September to mid-December 2008

Seamus O’Cuill from FundAssist says “it is clear that the weekly calculated SRRI figure will start deviating from the published figure during Q4 2013 for a significant number of KIIDs. Given the sliding window rule it is likely to be mid Q1 2014 by which time the full effect will be passed through the calculation. Though some of the changes will be caught by the year-end annual re-generation, it is likely that a significant number of required KIID updates will not coincide with this and revised KIIDs will be required.”

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