Fund Distribution Alert 2020-20

Fund Distribution Alert 2020-20



Said Fihri

Partner, ADV – Investment Services

KPMG in Luxembourg


ESMA consults on draft marketing guidelines

On 9 November, ESMA published a consultation paper concerning draft guidelines for marketing communications of UCITS and AIFs.

The consultation paper was prompted by the updated Regulation (EU) 2019/1156 covered in our fund distribution alert of 16 July 2019, issued along with a directive to facilitate fund distribution, and concerns the marketing guidelines ESMA is set to issue by 2 August 2021.

The proposed guidelines address the following notions from article 4(1) of the Regulation:

  1. marketing material shall be identifiable as such;
  2. they shall describe the risks and rewards of purchasing units or shares in an equally prominent manner; and;
  3. contain information, which is fair, clear and not misleading.

As regards the first point, the draft guidelines state that it should be clear that the communication “has a purely marketing purpose, is not a contractually binding document or an information document required by any legislative provision and is not sufficient to take an investment decision”. To this effect, it is suggested that each communication includes the term “marketing communication”. In addition, the inclusion of a specific disclaimer is proposed. For videos, this disclaimer should be embedded and not be featured at the end.

Concerning the second point, it is specified that risks and rewards should be presented in the same font, size and position and in conjunction with one another.

The third point focuses on the suitability of the communication to target investors (retail or professional) and that the communication is consistent with the other fund documents to describe the features of the investment. This includes the fund’s investment policy, the fund’s underlying assets, any information on costs, risks and rewards, past and future performance, the investment’s sustainability-related aspects, the use of leverage, active/passive management where relevant and references to national competent authorities.

Fund managers are reminded in the draft guidelines that they are responsible for all marketing communications addressed to investors in relation to funds that they manage, and it is specified that this also applies when marketing is conducted by distributors.

A proposition on what constitutes marketing communication is laid out and divided into the following six categories: advertisements regardless of medium, social media platform messages, individual marketing material, advertising communications in home and host states, descriptive communications provided to distributors which wind up with investors and third-party communications. Excluded from the definition are legal documents, corporate communications and social media messages which do not mention a specific product.

Feedback on ESMA’s suggestions and approaches must be provided by 8 February 2021 to be considered and the final guidelines are expected by 2 August 2021.

The consultation paper is available here.

Please feel free to contact us should you require any additional information.

Please note that any information provided is general in nature, is based on the latest publicly available information as analyzed on a best endeavor basis and does not constitute any specific legal opinion or advice.


Said Fihri
+352 22 51 51 7892

Stephanie Zedda
+352 22 51 51 7271

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