Covid-19 highlights PRIIPs' performance predictions flaws - reports

Returns 'fall short of forecasts'

The market correction seen in the first quarter in 2020 as a result of the impact of the coronavirus pandemic has highlighted flaws in the controversial future performance predictions under the PRIIPs regulation, with investor returns falling short of funds' forecasts, according to research from Schroders.

PRIIPs, which was introduced in 2018, forces retail investment product providers to publish future performance predictions reflecting a range of scenarios under different market conditions. The research by Schroders, seen by the Financial Times, shows that investors received lower returns than predicted in their funds' long-term performance forecasts as a result of the March market sell-off. Investors in ten funds analysed by the asset manager who sold their holdings in a European small-cap equity vehicle in May 2020 after owning it for five years would have received a return of €12,7...