Starting 25 February 2019, WM Daten will indicate the valuation frequency of target funds by introducing a new field (GD504X).
In accordance with the 2018 Annual Tax Act (published on 14 December 2018 in the 2018 Federal Law Gazette I p. 2338), the daily calculated equity ratio of the target fund may only be taken into account by the fund of funds if the target fund makes a valuation at least on a weekly basis (according to Section 2(6)3 or 2(7)3 of the Investment Tax Act). As established in the explanatory memorandum, this provision was introduced to rule out any potential abuse.
Thus, if a fund of funds invests in a target fund, which in turn does not perform a valuation at least on a weekly basis, the fund of funds must not use the published ratios of the target fund. Instead, the fund of funds may only consider the investment conditions of the target investment fund when determining its own equity ratio. This provision applies to both equity and mixed funds.
Consequently, WM Daten will introduce a new field, indicating whether or not target funds determine and publish their equity ratio at least once a week.
The classification will comprise a one-time self-declaration reported to WM by the investment fund or the party acting on behalf of the investment fund. The confirmation in the new field indicating that the investment fund indeed satisfies the conditions of performing a valuation at least once a week can be taken as an indication by the data user that the fund´s published equity ratios may be considered. However, if the information is not made available to WM, the relevant field will contain no entry.
The above-defined information needs to be submitted to WM Daten as soon as possible. Please make sure to adhere to this new reporting requirement in order to avoid that your investment funds lose its attractiveness as potential target funds .
Please do not hesitate to contact us; we would be happy to assist you in this matter!