Poland to cap investment fund management and redemption fees

Financial market regulator KNF said that the fixed management by investment fund houses (TFI) should be capped at 2 percent. “The management fee on open-end mutual funds and sub-funds should be capped at 2 percent of net assets under management and adjusted to the investment policy, profit and risk profiles,” the KNF wrote. The maximum redemption fee should be capped at the same level. This decision is one of the steps aimed to implement the MiFID II EU directive, introduced back in 2007, which seeks “to improve the competitiveness of EU financial markets by creating a single market for investment services and activities and to ensure a high degree of harmonized protection for investors in financial instruments.” Polish investments funds were calling for the MiFID II directive implementation without a planned additional reduction of management fees. They were also pushing back against a regulator demand that management fees no longer be shared with distributors. “The administrative cap, which has no economic justification, will lead to bankruptcy of some of the TFIs and, at the same time, it may influence the liquidity on our capital market which is still slowly recovering from the stagnation phase,” Chamber of Fund and Asset Management (IZFiA) head Marcin Tyl said, adding that such solution will favor foreign asset managers over the domestic ones.