UCI's Performance fees: calculation techniques and market practices - Advanced
Over the past years, performance fees have gained traction among UCITS managers. Unlike other elements pertaining to the UCITS environment, performance fees have been historically only lightly regulated. In addition, there was a great disparity among national regulators in the EU, from an outright ban to no regulation at all.
In 2019, this disparity prompted the European Securities and Markets Authority (ESMA) to launch a full-scale consultation process among the Member States. Following these consultations, the ESMA published on the 3rd of April 2020 its final guidance on Performance Fees which is applicable to UCITS and certain types of AIFs (marketed to retail investors).
On 5 November 2020, ESMA issued the official translations of its guidelines on performance fees in UCITS and specific AIFs, which then became applicable on the 6th of January 2021.
PwC's Academy is pleased to offer a training workshop dedicated to:
- understanding the principles of the performance fees calculation and the new regulatory framework, and to
- providing some considerations impacting the main actors before introducing a performance fee.
This training will also highlight the different issues linked to performance fees, give some insights on best practices. It offers the opportunity to go through practical application using real life exercises.
By the end of this course, participants will be able to:
- Understand the key elements of the different calculation methods following the Fund's investment strategy (High watermark, Hurdle rate, Index or combination);
- Apply the new reset mechanism (implemented by the recent ESMA Guidelines on Performance Fees) on each single calculation method;
- Update the validation checks following the new calculation methodology;
- Assess, based on the Fund's characteristics, which method is the most suitable.
- Market practice in Luxembourg for UCITS funds
- Examples of performance fees calculation and their pros and cons
- Classic methods: NAV/share, Total NAV
- Series of shares method
- Equalization method (equalization credit/debit, depreciation deposit, etc.)
- Practical exercises on each calculation method (HWM, Hurdle rate, Index) and the way to introduce the reset of the key indicator at the end of the Performance reference period
- Understanding and analysis of the most recent UCITS Q&A on performance fees section
A qui s'adresse la formation?
Fund Service Providers (from Fund accounting, Risk management, Regulatory departments, Client relationship management, etc.)