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A range of materials designed to help your clients broaden their investment knowledge.
Decoding active management
Preservation, Income and Real Return
At Columbia Threadneedle, we believe there are three important elements to consider when investing for retirement: Preservation, Income and Real Return. These investor-friendly animations set out each of these elements and why they are important for retirees, with the aim of providing a better understanding of what strategies to adopt for their personal circumstances.
Under regulatory rules, this Key Investor Information Document (KIID) must list the following details:
- Exactly what you are purchasing
- What its key investment objectives are, as well as its investment policy
- How risky it is likely to be
- How it has performed in the past
- How much you will pay for it
Most of these categories are self-explanatory, but it’s worth expanding on a couple of them. The risk and reward section, for example, is crucial: it is where the investment provider tells the investor exactly how risky the investment is, on a scale of one to seven, where one is the least risky and seven the most risky. By reading this, the investor can be under no illusion as to the potential volatility and risk of the investment they are about to purchase.
When it comes to charges, investors should also pay attention. The KIID lists the maximum charges you will pay when you buy as well as when you sell units in a fund. It will also tell you what you will pay in the way of annual running costs. But, crucially, it will not detail the effect of these charges on your investment, nor will it include any performance fees or transaction costs.
A practical information section will also list where you can find further information on the fund you have bought, where to find the latest price of your investment and performance details. It should also tell you how to switch your investment.
A KIID is a useful way for investors to compare funds offered by various fund houses as they all contain the same information to aid comparison.
Read it carefully to ensure you do not get any surprises once you’ve started your investment journey.
Supplementary Information Document (SID)
This offers additional information that is not in the KIID. A SID should contain the likes of:
- What to do if you change your mind about the purchase
- How to complain
- How you can escalate your complaint if you are unhappy with the response you receive from the fund manager
- Where you can seek compensation – namely, via the Financial Ombudsman – and how much you might be entitled to in compensation if successful.
A simple reference guide to some of the technical terms that you may come across as you explore investment options.