Because the content and layout is prescribed, the KID for all products will contain the following sections:
What is this Product?
This section gives a short description of the product that the KID relates to. In the context of what F&C Investments offers, the ‘product’ is the trust that you invest in (e.g. Foreign & Colonial Investment Trust), and not the wrapper that sits round it (e.g. Private Investor Plan, Investment Trust ISA). This will include the product’s aims/objectives, and summarise how the assets are allocated.
What are the risks and what could I get in return?
You’ll see a highlighted number which is referred to as the summary risk indicator. This is a guide to the level of risk of the product compared to other products and is on a scale from 1 to 7, where 1 is lower risk and 7 is higher risk. The higher the risk classification, the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the product. The lowest classification does not mean ‘risk free’.
This section will tell you what rating the product has been given and why, and will also outline any other risks that the investment carries (see Q6 for information on other types of risk).
As part of this section, we must also illustrate how an investment might perform under different market conditions (scenarios) and over different time periods. The scenarios presented are an estimate of future performance, based on evidence from the past, but are not an exact indicator. You should bear in mind that past performance is not a guide to future results and the value of investments can go down as well as up.
If you are in any doubt about whether the product and the associated risks are right for you, we would recommend you consult an independent financial adviser. You can find advisers in your area at www.unbiaised.co.uk
What happens if the Company is unable to pay out?
This section tells you about any protection that applies in relation to your investment in the product. Important: in this section, ‘company’ refers to the investment trust, and the Financial Services Compensation Scheme (FSCS) does not apply to the trust itself. However, as an FCA regulated firm, FSCS does apply to F&C Management Ltd, so if that business failed and could not meet its liabilities, FSCS provides an element of protection. Investment losses are not covered.
What are the costs?
There are various costs associated with an investment into one of F&C’s products (again, in this context we’re referring to the investment trust funds that F&C Investments offers). There are direct costs for investing into the product, as well as indirect costs that are incurred for the day to day operation of the product. These costs can have a reductive effect on the returns investors get over time, and in the spirit of greater transparency, the regulation requires firms to illustrate the potential impact.
Important: the KID will not contain details of the costs associated with the wrapper (e.g. Private Investor Plan, Investment Trust ISA). Those will continue to be illustrated in the relevant Key Features and Terms & Conditions document. There is also a pre-sales cost disclosure document which outlines the combined costs for the product and the wrapper. This document is available on the F&C Investments website (fandc.co.uk)
How long should I hold it and can I take money out early?
This section will tell you if there is any minimum holding period or early encashment penalty
How can I complain?
This section will tell you how to contact F&C if you are unhappy and about any rights you have to take your complaint further.
The final section of the KID contains any other relevant information, which may include details of how to obtain literature or current prices.