The COVID-19 pandemic brought a wave of unprecedented volatility to global financial markets, significantly impacting the risk indicators for UCITS and PRIIPs. As we enter 2025, the effects of this volatility are beginning to unwind, prompting widespread updates to Key Investor Information Documents (KIIDs) and Key Information Documents (KIDs).
Last August, we highlighted the potential for major shifts in these metrics, forecasting the need for extensive KIID and KID re-generation across Q1 and Q2 2025. (Read more here).
COVID-19’s Lasting Impact on Market Volatility
The onset of the pandemic in early 2020 caused extreme fluctuations in financial markets, creating a legacy of volatility that has shaped financial products and their risk profiles. The UCITS KIID Summary Risk and Reward Indicator (SRRI), calculated over a five-year period, remains notably affected by this period of intense market disruption.
Similarly, PRIIPs KIDs, particularly those with a recommended five-year holding period, have experienced volatility-driven changes in their Summary Risk Indicator (SRI) calculations.
What We’ve Seen So Far
To date, around 40% of UCITS KIID weekly SRRI calculations have shown a downward shift in their risk indicator. This trend is expected to continue through to mid-April, leading to a widespread re-evaluation of documentation.
While the movement in PRIIPs SRI calculations has been less significant due to broader risk bucket sizes, the need for updates remains clear.
The Implications for Product Manufacturers
The ongoing adjustments in SRRI and SRI calculations will require the re-generation of a significant volume of UCITS KIIDs and PRIIPs KIDs. This task will likely extend well into the summer months, demanding careful planning and resource management from product manufacturers.
Early preparation is key to managing this workload effectively and ensuring compliance with regulatory standards.
Expert Insight from Funds-Axis
Seamus O’Cuill, Head of Investor & Digital Solutions at Funds-Axis, emphasizes the importance of proactive planning:
The expected unwinding of peak volatility periods from the SRRI and SRI calculations is driving the need for extensive updates to UCITS KIIDs and PRIIPs KIDs in mid-2025. At Funds-Axis, we’ve been actively supporting our clients to ensure they are fully prepared for this eventuality.
He adds:
If any investment managers or management companies wish to test their calculations over the coming months, we are more than willing to engage with them and offer a free trial of our calculation portal.
How Funds-Axis Can Support You
Navigating this period of change doesn’t have to be overwhelming. At Funds-Axis, our UCITS KIID/PRIIPs KID document production services and SRRI/SRI calculation support are designed to simplify the process.
Contact Seamus O’Cuill at seamus.ocuill@funds-axis.com to learn more about how we can help you navigate these updates with confidence.
