Performance fee rules across Europe lacking harmony

52% of performance fee structures already adhere to ESMA recommendations

Compliance with ESMA rules remain largely uneven across the two main European fund centres, according to a review of 1,254 performance fee structures of over 120 fund promoters across Europe by Fitz Partners.

Following the early introduction of stricter requirements by the Central Bank of Ireland which became effective in November 2020, all Irish domiciled funds included in Fitz Partners' research comply fully with ESMA's requirements. The Luxembourg regulator, the CSSF, has also applied ESMA's guidelines. However, Luxembourg-domiciled funds have until their first accounting date post 5 July 2021 to adhere to the new requirements. According to ESMA's requirements all UCITS funds must crystallise performance fees no more frequently than annually and must have in place either a five-year Hig...