As part of the European Supervision exercise, the Financial Markets Authority (AMF) examined management firms’ practices in terms of identifying and controlling costs and fees associated with managing UCITS. Exercise, for example, has made it possible to highlight two relatively uncommon, but open to criticism. For 14 funds out of approximately 2050 analyzed, the Arab Monetary Fund noted that the composition of the portfolio is very close to that of the index, indicating a rather negative management style, although the observed level of current costs was high.
It also identified, in the case of 7 funds, a very high level of transaction fees, above 2.5% of net assets. In both cases, the level of fees severely hampers the achievement of management objectives as well as the possibility of outperformance relative to the benchmark.
So it was decided to develop established rules. The first change concerns the ban on movement committees. It aims to eliminate the possibility for UCITS managers and AIFs to benefit from transaction commissions, except for transaction commissions on real estate assets. To allow management companies to adapt their system, these amendments will be implemented as of January 1, 2026. The amendment of the general regulations of the Arab Monetary Fund was approved by order of the Minister of Economy and Finance and the reminder published on May 19, 2022. In this perspective, the Arab Monetary Fund will amend its doctrine to determine the implementation of This change.
The second change concerns the marketing of active funds that will have high fees due to their performance close to that of their index, as well as passive funds that have high fees. With regard to active funds, ISPs must establish procedures in order to be able to identify funds with high fees in relation to their tracking errors against their benchmark. For passive funds, the AMF also specifies that ISPs must have policies and procedures in place that enable them to compare the level of fees for funds that exhibit a negative management objective with those of similar funds in order to determine whether the lowest-cost equivalent collective investments are likely to match. . profile of their clients.
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