The French financial regulator has called for European convergence over performance fees after finding a number of funds did not implement best practices.
The Autorité des Marchés Financiers (AMF) wants to see more funds adhere to recommendations from the International Organization of Securities Commissions dating back to 2004, which attempt to better align client and manager interests.
For example, one recommendation was that these fees be charged no more than once a year.
The regulator itself employs these practices in its general regulations but found other funds in the EU and some marketed in France did not share the principles.
Some Ucits funds were observed to charge performance fees on a quarterly basis, the AMF said in a report into fund fees.
A number of active equity funds charged fees whenever their performance beat the Eonia money market benchmark.
The AMF’s call for harmonisation is contained in a wider report on fund fees, called ‘Fees charged in 2015 by Ucits distributed in France’, which was published earlier this week. The AMF found that 13 foreign Ucits had not implemented recommendations on how to manage performance-related fees and wants to see European convergence in this area.
The study of over 8,000 funds also found that non-French providers of Ucits funds in France were charging slightly higher ordinary fund fees than local providers.
Economies of scale were partly to blame for the discrepancy in costs, the regulator said, and the dispersion of ongoing charges for non-money market funds was high, although there was a concentration around the average for each asset class.
Fund size was another cause. The report noted that more than half of Ucits sold in France at December 31, 2015, accounted for less than €50 million in assets.
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