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FundAssist: KIID Developments - SRRIs: A Year of Change


    The market volatility experienced during the financial crisis naturally had a material effect on the risk and reward profile of many investment funds. As we move into a more stable period, risk/reward profiles need to be changed to reflect new realities.

    Last year, FundAssist published an article that anticipated the wholesale regeneration of published Key Investor Information Documents (KIIDs) as a result of changes to their critical components, the Synthetic Risk Reward Indicators (SRRIs), as calculated over a five year period.

    This prediction has come to pass. If a SRRI changes consistently on a weekly basis over a four month period, an updated KIID with a new SRRI must be produced and circulated.

    This meant that by the end of 2014;

    • Half of all published KIIDs had a new SRRI number, and
    • Over 70% of those were outside the annual regeneration period, with the result that,
    • More than 1 in 3 KIIDs published had to be reissued outside the regeneration period.

    There are indications that new SRRI norms may be emerging for different asset classes.

    This table compares the anticipated current SRRI numbers with those of 2013:

    Fund Type   Most Common Current SRRI   Most Common SRRI Sept 2013   Emerging Market Equity

    European/US Equity

    UK Equity

      6

    5-6

    6

      7

    6-7

    6-7

      Asia Pacific Equity   6   6-7   Emerging Market Bond

    Global High Yield Bond

    European Bond

      3-4

    3-4

    3

      4-5

    4-5

    3-4

      GBP/US Bond   3-4   4  

    As normality returns to the market, SRRI figures will become more stable, necessitating less KIID updates.

    According to Seamus O’Cuill, Product Manager at FundAssist,

    “The market has now recovered from the Lehman effect and fully re-calibrated itself. It seems that the changes that we saw to the SRRI figures as a result of extreme market turbulence, are now a thing of the past. From next year, less frequent KIID updates will be required as a result of the increasing stability in the SRRI calculations.”