Supervisory actions on fees and valuation of fund assets


Asset managers' processes must comply with ESMA's recommendations following its supervisory actions on the costs and fees paid by investment funds (2022 report) and the valuation of UCITS and AIF assets (2023 report).

Cost and fees paid by Undertakings for Collective Investments in Transferable Securities (UCITS)

In 2021, the ESMA launched a supervisory action regarding costs and fees charged on UCITS investment funds. The final report raises several points including the costs not due, those charged when assets are small or the absence of review of the invoicing process. More transparency on those costs is required vis-à-vis investors.

The CSSF (Commission de Surveillance du Secteur Financier) asked asset managers to comply with the ESMA and the Luxembourg Regulator observations on cost policy management by 31 December 2023. This review of the fee management process also applies to AIFM for assets under management.

In France, the AMF published in May 2022 a synthesis of SPOT controls related to the implementation in France of the ESMA-coordinated supervisory exercise on fees and costs of UCITS sold to retail investors: Read the synthesis.

Valuation of UCITS and Alternative Investment Funds (AIFs) assets

In January 2022, the ESMA had launched another supervisory action on assets valuation under the scope of UCITS/AIFM Directives, whose results were published on 24 May 2023: Read the report.

In short, its aim is to make sure that asset valuation methods for UCITS and AIFs are reviewed at least once a year or more, depending on market conditions. Methods of internal valuation for unlisted assets are preferred.

In July 2023, the CSSF reminded the actions to be carried out by UCI managers by December 2023: To analyse their systems and criteria of asset valuation and put in place the appropriate measures.

The CSSF intends to perform spot controls and on-site visits to check if and how asset managers consider ESMA and Luxembourg Regulator recommendations.

In July 2023, the French Autorité des Marchés Financiers (AMF) published a summary of "SPOT inspections" on UCITS/AIF valuations and more specifically less liquid asset classes: Read more.

Jean-Pierre Gomez
Head of Public and Regulatory Affairs
SGSS Luxembourg