News Risk & Compliance

Rules on advertising by investment fund managers

Date:December 29, 2021

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On 2 August 2021, the European Directive and Regulation on the cross-border distribution of investment funds and UCITS entered into force. Although the names of this Directive and Regulation give the impression that they (mainly) contain rules for managers of investment institutions also operating in other EU countries, a number of rules also apply to managers operating only within the Netherlands.

The regulation includes explicit requirements on ‘marketing communications’ such as advertisements by authorised investment fund and UCITS managers. These rules apply to all advertisements issued by authorised managers, therefore including advertisements for investment funds that are only open to professional investors.

The requirements set out in the regulation are quite general. ESMA has therefore elaborated the requirements in detail in so-called guidelines. These guidelines were published on 2 August 2021 and will formally apply from 2 February 2022. For investment fund managers, it is advisable to take note of these guidelines in time and take them into account when designing (new) advertisements and other forms of disclosures.

In this news item, we explain the requirements of the guidelines in more detail.

Who do the guidelines apply to?

The guidelines apply to all advertising communications aimed at investors or potential investors in investment funds. This covers both UCITS and investment institutions under AIFMD including special types such as EuVECAs, EuSEFs, ELTIFs and money market funds (MMFs). In addition, it is worth noting that the guidelines also apply to investment institutions offered (exclusively) to professional investors.

The requirements of the regulation and the guidelines do not apply to investment fund managers under the AIFMD-light regime.

Purpose of the new rules

This new regulatory framework aims to improve investor protection, inter alia by imposing requirements on marketing communications (also known as ‘marketing statements’ or ‘advertisements’). For example, marketing communications must be recognisable as such and describe the risks and benefits of buying units in an investment institution in an equally prominent way. Also, all such information addressed to investors must be presented in a correct, clear and non-misleading manner.

What is meant by marketing communications?

The guidelines apply to all marketing communications addressed to investors or potential investors in investment institutions.

Examples include:

  • All communications that contain advertising for an investment institution, here the medium does not matter (digital, print, live presentations, etc.);
  • Messages posted on social media (such as blogs and social networks) that refer to the characteristics of an investment institution (including the name of the investment institution);
  • Marketing materials addressed to individual investors or potential investors, as well as documents or presentations made available by the manager on its website or elsewhere;
  • Communications originating from third parties used by the manager for marketing purposes.

Examples of communications that are not considered marketing communications include:

  • The prospectus, the Key Investor Information Document (EBI) and/or the Key Information Document (EID), annual and semi-annual reports of investment institutions, fund conditions, etc;
  • Corporate communications from the manager describing its activities or some recent market developments (e.g. results, dividends, organisational announcements), provided they do not refer to specific investment vehicles;
  • Short online messages containing only a link to the publicity announcement; and
  • Pre-marketing information or announcements.

What should marketing communications comply with?

The guidelines set out detailed requirements for marketing communications. Important elements of these are that publicity communications:

  • Be recognisable;
  • Conspicuously describe the risks and benefits; and
  • Be accurate, clear and non-misleading.

In addition, the guidelines include various types of warning phrases that are mandatory to use in specific types of publicity communications. The guidelines also refer to sustainability risk disclosures.

Below, we consider the above requirements in more detail, without elaborating on all the specific requirements.


The starting point is that publicity communications should be recognisable as such. This means that it must be sufficiently clear from an expression that it has a marketing purpose. A marketing communication is already recognisable when it clearly contains terms such as “advertising”, or “#advertising” when it is an online publication.

Equally salient description of risks and benefits

If a marketing expression provides information about risks and benefits of an investment institution, the guidelines require that the communication must at least:

  • Accurate;
  • Provides an accurate and clear indication of all relevant risks; and
  • Identifies both benefits and risks and presents them in an equally salient manner.

Correct, clear and not misleading

An important standard, which is already included in other disclosure regulations, is that publicity communications must be correct, clear and non-misleading.

An example of this is that information on, for example, investment policy, recommended investment period, risks and benefits and costs should be consistent with the information contained in legally required disclosures such as the prospectus, financial statements and ECA/EID.

Furthermore, the guidelines contain several detailed rules on the information to be included in specific situations. An example is that when an investment institution tracks an index, the words “passive” or “passively managed” must be included in addition to the words “index tracking”. The guidelines also contain several (very) detailed rules regarding information on costs, historical returns and (expectations of) future returns. It is highly recommended to take note of these provisions before publishing a publicity notice.

Finally, it is stipulated that – when marketing communications are addressed to non-professional investors – the use of overly technical wording should be avoided. Sufficient explanations must also be given about the complexity of the investment vehicle and the risks associated with the investment. This is so that investors can better understand the characteristics of the promoted investment vehicle.

Warning phrases

The guidelines require advertising communications to include warning phrases and/or a disclaimer.

An example is:

This is an advertisement. Please consult the [prospectus of fund X/information document of fund X] and [the key investor information document/the key information document] (delete as appropriate) before making an investment decision.

If a disclaimer is too long for the format (as, for example, in the case of posts on Twitter), it should be clearly indicated that it is a publicity announcement. For example, by including text such as “#publicity”.

When information on past performance is presented, it should be preceded by the following statement:

Past performance is no guarantee of future performance“.

When information on expected future results based on past performance and/or current conditions is presented, the following cautionary sentences should be included:

The scenarios presented are an estimate of future returns based on past data, and do not provide an exact indication. Your return depends on how the market performs and how long you hold the investment/product.”

Sustainability disclosures

The guidelines conclude with requirements on sustainability disclosures. Based on the SFDR (Sustainable Finance Disclosure Regulation), sustainability disclosures must be provided on investment vehicles. When a marketing communication refers to these sustainability aspects, it must be consistent with the information you are required to provide under the SFDR.

In addition, the communication should include a link to the website where more information on sustainability aspects of the investment institution can be found.

Take a close look at your disclosures

Investment fund managers targeting (exclusively) professional investors have to deal with specific rules on advertising for the first time with the entry into force of the European Regulation on cross-border distribution of investment funds and UCITS. While the impact of these rules seemed to be rather limited due to their ‘high-level’ nature, the guidance issued by ESMA shows that the impact could potentially be very large. It is therefore advisable to scrutinise all forms of disclosures and adapt them to the new requirements where necessary.

As investment fund managers targeting retail investors were already subject to rules on advertising, the impact of the guidelines may be more limited for them. However, even these managers should take thorough note of the content of the guidelines. Indeed, the guidelines are much more detailed than other regulations prescribed in this area. For these managers too, it is advisable to scrutinise all forms of disclosures and adapt them to the new requirements where necessary.

Want to know more?

Projective Group can help you assess your marketing communications. Are you unsure whether your communications qualify as marketing communications? Or do you already know, but are curious whether they are in line with the ESMA guidelines? Feel free to contact us, we will be happy to help.