Tickets for the fund market: no fund trading without fund data and documents Photo: kevinjeon00 Source: iStock

Tickets for the fund market: fund data and documents

Author: Eva Reiffenstein, Anna Müller, Alexander Ehmann and Steffen Hölscher

Data on the target market, Key Investor Information Documents (KIIDs), fact sheets... the wealth of fund information has grown due to regulatory requirements. Universal-Investment uses the service provider FE fundinfo, to ensure all fund data and documents are accepted for national and international third-party sales, largely by means of a fully automated process. In an interview with universal spotlight, Alexander Ehmann and Steffen Hölscher, who are both European Sales Managers at FE fundinfo, talked about the challenges and enormous growth of the publications. Eva Reiffenstein, Head of Distribution Network Services at Universal-Investment, and Anna Müller, Head of Commission Management, also told us about the impact of the MiFID II financial market regulation on the publication of fund information.

Eva Reiffenstein, Head of Distribution Network Services, Universal-Investment Photo: Alexander Habermehl

universal spotlight: Why is Universal-Investment now having all of its documents relating to funds published by FE fundinfo?

Eva Reiffenstein: The constant increase in the number of distribution partners around the world meant that sending them out ourselves was no longer efficient. That is why, as a specialist service provider, FE fundinfo supplies all fund-related data and documents to our distribution partners without the need for us to do anything, and without incurring additional costs for our fund initiators and distributors.

Alexander Ehmann, Sales Manager Europe, FE fundinfo Photo: Alexander Habermehl

A fund may not be marketed without a KIID, just like medication may not be sold without a PIL.

Alexander Ehmann

How are fund documents published?

Alexander Ehmann: We publish all legal documents and data that are important for investors on fundinfo.com. These include KIIDs, annual and semi-annual reports, and the daily fund prices. Our website currently covers 19 different countries, but we distribute the documents worldwide to distributors, data providers and media companies through our “Document Dissemination Service”. The most important document from a regulatory perspective is the KIID. A fund may not conduct any sales activities without a KIID. I like to use an example from the pharmaceutical industry: imagine going to a chemist to pick up some medicine, but the chemist is not allowed to sell it to you because the patient information leaflet (PIL) is missing.

FE fundinfo not only publishes documents for Universal-Investment, but also distributes them to third-party sellers. What distribution channels do you use?

Steffen Hölscher: We have three ways of distributing documents. Most of the traffic goes through direct interfaces with the distributors. The second possibility involves dedicated websites. And thirdly, we have a fully automated e-mail system using a web tool.

Steffen Hölscher, Sales Manager Europe, FE fundinfo Photo: Alexander Habermehl

Without this target market data, there can be no fund trading.

Eva Reiffenstein

What has changed as a result of the MiFID II financial market regulations?

Eva Reiffenstein: Since 1 January 2018, it has only been possible to trade fund units if there is data on the target market. FE fundinfo provides a defined set of data to our distribution partners in a defined format on our behalf. Without this target market data, there can be no fund trading.

Anna Müller: And there are different formats of the “European MiFID” templates (EMTs), which adds to the difficulty of creating them and distributing them in the market.

Alexander Ehmann: That’s right. There are three formats for the market at the moment: EWG, openfunds and a special format for WM Datenservice.

Eva Reiffenstein: All of the big players now insist on openfunds, which has established itself as the standard in Germany and Austria. That is why this is the format that we issue.

Where does this complexity come from?

Steffen Hölscher: It’s because the fund sector has grown much faster than investment in the corresponding technology over the past decade.

Alexander Ehmann: The fund sector has focused on distribution and expanding assets. But it has overlooked the exponential growth in the volume of data and documents. When I joined FE fundinfo in 2013 we had five million documents in our portfolio, and now we have 35 million.

Anna Müller, Head of Commission Management, Universal-Investment Photo: Alexander Habermehl

Sometimes there is a “chicken and egg” problem when it comes to fund data.

Anna Müller

Steffen Hölscher: It’s because the fund sector has grown much faster than investment in the corresponding technology over the past decade.

Alexander Ehmann: The fund sector has focused on distribution and expanding assets. But it has overlooked the exponential growth in the volume of data and documents. When I joined FE fundinfo in 2013 we had five million documents in our portfolio, and now we have 35 million.

What other challenges are there?

Anna Müller: Sometimes there is a “chicken and egg” problem when it comes to fund data, in that funds must be set up and active in order for the fund data to be provided to banks and fund platforms through providers such as WM Datenservice. Our fund partners, however, assume that their funds are also available on the market as soon as their data has been set up with Universal-Investment.

Eva Reiffenstein: Funds can only be traded once the distribution partner has entered the data provided into its system. This may take up to ten bank working days. After all, the market is huge and the platforms contain the data for hundreds of funds that are traded on them.

October 2019 

Author: Eva Reiffenstein, Anna Müller, Alexander Ehmann and Steffen Hölscher
Date of issue: 2/27/2020