Professional guides

  • Practically oriented, and partly reserved to our members, the AFG’s professionnal guides provide an array of tools for Asset Management practitioners.
  • The French asset management industry offers a wide range of investment management solutions, enabling it to meet different investment objectives for different investors.
    Some collective investment schemes (CIS) offered in France have fee structures that include performance fees. These structures aim to ensure better alignment between the interests of investors and asset management companies, with a view to outperforming a predefined index or exceeding a predefined threshold.
    This guide reiterates how important it is for the methods used to calculate performance fees to comply with the principles set out by IOSCO in 2016. Performance fees levied by open-ended collective investment schemes must reflect as accurately as possible the returns generated by management and seek not to put investors at a disadvantage when returns are distributed.

  • ETF: Continuity plan in the case of an event or default affecting a counterparty – May 2018
    Following the public consultation on ETFs, which ended in May 2017, the French financial regulator (AMF) asked French management companies who managed ETFs to produce a
    continuity plan in the event of default of a counterparty of the ETF.
    The purpose of this note is to propose a continuity plan in relation to management of ETFs, when the fund uses OTC financial derivative instruments or securities lending, each management company being responsible for putting its own continuity plan in place.
  •  Liquidity risk management tools in open-ended funds – May 2017
    Liquidity risk management is a major concern for asset managers, particularly in the context of open-ended funds, in terms of ensuring the liquidity disclosed to investors in accordance with the fundamental principles of equal treatment of investors and market integrity.
    On the asset side, even if a presumed hierarchy of liquidity exists among the various asset classes, liquidity is not naturally attached to one asset class or another. The relative liquidity of assets can vary over time, affecting the cost or the time needed to liquidate the position held in the portfolio, and can sporadically be reduced or even disappear in case of a serious liquidity crisis in a given market segment. Liquidity is a dynamic and relative notion.
  • AFG Code of Practice on liquidity risk management in Collective Investment Schemes (CIS) – January 2016
    The topic of liquidity has over the recent years been a major concern for global regulators. European regulations, in particular the AIFM Directive, place liquidity risk management, in normal and stressed situations, at the heart of the risk management process of management
    The objective of this Code is twofold:
    • Adopt in a single document a series of recommendations aimed at all companies which are AFG members. These recommendations reflect a common approach to good practice in line with regulatory requirements;
    • Offer practical methodological guidance 
  • Code of conduct for asset managers using Swing Pricing and variable anti dilution levies (ADL) 2014 (modified in January 2016)
    The purpose of this Code is to define and promote standards on the use of Swing Pricing and variable anti dilution levies (ADL).
    • Swing Pricing is a mechanism by which the net asset value is adjusted upwards (or downwards) if the change in liabilities is positive (or negative) in such a way as to reduce for existing investors the portfolio restructuring costs linked to subscription/ redemption movements in the fund.
    • The variable anti dilution levies (hereafter ADLs) allow adjusting entry and exit charges upwards (or downwards) if the change in fund liabilities is positive (or negative) so as to reduce for existing investors the portfolio restructuring costs linked to subscription/redemption movements in the fund.
    These two mechanisms help reinforce fair treatment of investors.
    The Code applies to all collective investment schemes – i.e. UCITS and AIFs – for which the management company (AFG member) has decided to implement these mechanisms.
  • Code of conduct on the use of stress tests – April 2015
    The AFG Code of conduct on the use of stress tests is aimed at AFG members as a tool in helping them to implement the regulatory provisions pertaining to these techniques. It applies to any Collective Investment Scheme (CIS) to which a member asset management company applies stress tests. Each asset management company is responsible for the definition and implementation of its own stress test policy.
  • Life-cycle management of PERCO company pension savings schemes – Best Practice Guide – A 2014
    A PERCO (plan d’épargne retraite collectif) is a defined-contribution pension savings scheme that allows beneficiaries to build up a lump sum or an annuity, which is locked in until retirement. Exceptionally, entitlements can be paid out early in five cases: acquisition of a main residence, disability, death, debt overload, and expiry of unemployment benefits.
    In consequence, the PERCO has a long-term investment horizon.
    The operating procedures are set forth in the scheme’s bylaws; they can be company-specific or apply to several companies.
    Membership is optional. Employees can pay their profit sharing money or bonuses into the PERCO and also make additional payments on a regular or periodic basis. The company can then top up these payments with matching contributions.
    In accordance with the Pension Reform Act adopted on 9 November 2010, at least one-half of profit sharing money must be paid into the scheme by default.
  •  AFG recommendations concerning the Synthetic Risk and Reward Indicator (SRRI) – July 2012
    The simplified fund prospectus was replaced by the Key Investor Information Document (KIID) on 1 July 2011. The KIID is a standard two-page document with five sections, including one on the risk and reward profile of the fund. This section contains three subsections: the Synthetic Risk and Reward Indicator (SRRI) denoted on a numerical scale from 1 to 7, a narrative section explaining the risk indicator category and another narrative section dealing with material risks that are not captured by the indicator.
    In July 2010, ESMA published guidelines setting out a specific methodology for calculating the SRRI. The standard methodology is based on the volatility of the fund. The historical annualised volatility of total returns is determined on the basis of weekly returns over a five-year period. The fund is then allocated to a risk category using the grid of volatility intervals provided by the 
    European Securities and Markets Authority (ESMA).