The Death of KIDs

The views expressed in this article are those of its author and not necessarily those of ShareSoc.

HM Treasury have announced plans to revoke the PRIIPs regulations which will likely mean the death of KIDs (Key Information Documents).

KIDs are imposed and regulated under the PRIIPs regulation as devised by the EU for packaged investment products, such as funds and trusts. KIDs give basic financial information, risk indicators and likely future performance based on past performance. Those who purchase investment trusts, for example, will be asked to confirm they have read the KID before purchasing a holding. But in reality KIDs are grossly misleading for many investment trusts.  This is because their estimate of future returns are based on short-term historic data. This has caused many fund managers of investment trusts to suggest that they should be ignored and investors should look at the other data that the companies publish to get a better view of likely future returns. This writer certainly ignores the KIDs for the investment trusts I hold and I doubt most retail investors took much notice of them.

The Treasury have issued a public consultation on what might replace KIDs – see https://www.gov.uk/government/consultations/priips-and-uk-retail-disclosure . It explains exactly why KIDs need scrapping.

I may respond in some detail to the consultation as I might have time over Christmas to do so, and I trust ShareSoc will do likewise.

In the meantime, I am still waiting for the usual Santa rally in share prices. Perhaps I am just being impatient and Santa Claus may arrive in the last few days before Christmas. I hope so but the market has already gone quiet with prices stabilising. I guess folks might be too busy attending parties and doing Christmas shopping to spend time on share trading.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )