Question ID: 3236
Regulation Reference: (EU) 2023/894 - ITS with regard to the templates for the submission of information necessary for supervision
Topic: Reporting Templates
Template: S.06.02
Status: Final
Date of submission: 31 Jan 2025
Question
Acknowledging that the responsibility of proper CIC classification is up to the single undertaking, we would like to ask for clarification as regards the attribution of the CIC to Collective Investment Undertakings, in particular in relation to the triggers leading to the proper classification of Asset allocation funds (CIC 44) versus more specific type of funds (for example Debt funds – CIC 42). In particular, guidance is needed in identifying if priority in assigning CIC code has to be given to:
a) Prospectus of the fund; or
b) Prevalence of look-through as of reporting date.
In the specific case of Asset allocation funds, the choice between the two possibilities above could lead to differences in CIC code attribution, as according to the prospectus the weight of specific underlying asset classes/investment strategies is only providing high level limits, whereas there could be a prevalence of a specific asset class according to look-through information at the reporting date.
As an example, consider a fund with the following characteristics:
- Specific objective of the fund: controlled volatility with stable income;
- Look-through as of reporting date: 60% fixed income; 30% equity; 10% other.
Applying criteria (a) the fund would be classified as CIC 44 (Asset allocation funds), whereas applying (b) the classification would result in attribution of CIC code 42 (Debt funds).
Choice (a) would guarantee a more stable classification over time whereas choice (b) would provide a more proper classification for the specific reporting date.
Background of the question
Regulation (EU) 2023/894, Annex VI (Definitions of the CIC Table), states as follows regarding CIC 42: “Collective investment undertakings mainly invested in bonds.” About CIC 44: “Collective investment undertakings which invests its assets pursuing a specific asset allocation objective, e.g. primarily investing in the securities of companies in countries with nascent stock markets or small economies, specific sectors or group of sectors, specific countries or other specific investment objective.”
EIOPA answer
According to the instructions of the ITS on Reporting, when classifying an asset using the CIC table, undertakings shall take into consideration the most representative risk to which the asset is exposed to.
Based on the example provided in the question, the undertaking is expected to assess whether the information provided in the prospectus of the fund matches with the definition of "CIC 44 - Asset Allocation funds" in Annex VI of the ITS on Reporting.
Asset Allocation funds are defined as Collective investment undertakings which invests its assets pursuing a specific asset allocation objective, e.g. primarily investing in the securities of companies in countries with nascent stock markets or small economies, specific sectors or group of sectors, specific countries or other specific investment objective.
If the fund is in line with this definition, regardless of the exact asset composition, it should be categorised as CIC 44.
If the fund is not in line with this definition, it is therefore assumed that the most representative risk of the fund is about fixed income instruments.
In such a case the CIU should be classified as CIC 42 – Debt funds.