Earlier this year, the European Securities and Markets Authority (“ESMA”) published its final report, ESMA34-45-1244, (the “Final Report”) relating to guidelines on the requirements for marketing communications sent to investors (the “Guidelines”), supplementing the Directive on cross-border distribution of collective investment undertakings (EU) 2019/1160) (the “Regulation”), and capturing the following vehicles:

  • alternative investment funds (“AIFs”);
  • European social entrepreneurship funds (“EuSEFs”);
  • European venture capital funds (“EuVECAs”); and
  • European long-term investment funds (“ELTIFs”).

The purpose of the Final Report is to reiterate the importance of marketing communications to contain fair, and not misleading information and adequately describe the risks and rewards of purchasing units or shares of an AIF or units of an undertaking for collective investment in transferable securities (“UCITS”) in an equally prominent manner.


The Guidelines apply to:

  • UCITS management companies;
  • AIF managers;
  • EVECA managers; and
  • EuSEF managers,

and apply to all marketing communications addressed to investors or potential investors in UCITS and AIF funds.

The types of documents which may be considered to fall within the remit of marketing communications includes (but is not limited to):

  • all communications advertising for a UCITS or an AIF, regardless of medium;
  • messages on social media platforms or other discussion forums where the information refers to any characteristics of a UCITS or AIF (including simply their name);
  • documents/presentations addressed individually to investors or made available to the public by the relevant manager; and
  • communications by a third party used by the relevant manager for marketing purposes.

Further to the above, the below examples of communications should not be considered as marketing materials:

  • legal and regulatory documents of the fund such as a prospectus, memorandum, partnership agreement, and other similar documents legally required to establish the fund;
  • corporate communications disclosed by the relevant manager including information such as earning reports or announcements, whereby the communications do not refer to a specific UCITS or AIF (unless the activities of the relevant manager are limited to one fund or a small number of funds implicitly identified in the corporate communications);
  • short messages published online which may include a link to marketing communications but do not contain information specific to the UCITS and/or AIF; or
  • information issued per pre-marketing rules.


The key takeaways for the Guidelines around assessing whether a communication is marketing or not, and the parameters around the identification of such information as a marketing communication is as follows:

  • references to a UCITS or AIF may only be published after the competent supervisory authority has granted approval and (where approval is required) that the relevant manager has received notification that it may market the fund;
  • the communication which is being used for marketing purposes, should make it clear that the information has been provided for marketing purposes only and is not a contractually binding document. Such marketing communications should include a disclaimer stating the same and referring readers or listeners to the relevant binding documents before a prospective investor makes any final investment decisions;
  • where such marketing communications as described above, are not able to provide such a disclaimer (e.g. due to restrictions on the number of characters placed by certain social platforms) then at a minimum the communication should identify itself as a “marketing communications” and use those exact words for the avoidance of any doubt;
  • any disclaimers used should be displayed clearly, as deemed appropriate depending on the particular medium used for the communication; and
  • if a marketing communication contains an unnecessary amount of references to legal or regulatory provisions, then if the information presented is supposed to be a marketing communication, it will no longer be deemed identifiable as such. Therefore, such references should be restricted where appropriate.


The following requirements should be met where a marketing communication includes information on the fund’s risks and rewards:

  • references to any potential benefit for investing in the fund should be balanced against references to any relevant risks. The benefits and risks information should also be made equally prominent from a visual perspective (e.g. use of font and size, placement in a presentation, etc.) and should be referenced in the same place; and
  • where risks are disclosed in small characters, in footnotes, or in a separate document, this is unlikely to meet the requirement around equal prominence of risks and disclosures.


The real focus of the Guidelines centred on ESMA’s recommendations with respect to ensuring that marketing communications are fair, clear and not misleading, and how this can be achieved in practice. The useful tips provided are as follows:

  • suitability: marketing communications should be tailored to the type of investors they are promoting the fund to i.e. whether retail or professional. For example, if the fund is being marketed to retail investors, it is important to keep any technical wording to a minimum;
  • consistency: the information should be consistent (and not contradictory) with any other information contained in the relevant legal/regulatory documents for the fund, noting however that differences in the presentation of the information is fine as long as the differences in presentation do not cause confusion;
  • investment features: information should be kept up to date and include at least a short description of the investment policy of the fund and types of assets into which the fund may invest. If leverage is to be used by the fund, the impact of this should be explained and specifically the risk of potential increased losses or returns as a result of the use of leverage. Reference as to whether the relevant manager or fund itself has been approved by a competent authority may be added as a matter of fact, but should not be described as a persuasive tool. Generally, any overoptimistic wording should be avoided unless it is balanced with clear explanations that there are still risks associated with the investment e.g. it is best practice not to use language such as “the best fund”, “safe investment”, or “effortless returns”. Description of the investment features may include a comparison with other funds, however, this should be limited to investment policy and risks & rewards of profile comparisons unless there is sufficient detail given on the differences between the funds;
  • risks and rewards: disclosure of the risk profile should refer to the same risk classification as that included in the KID or KIID. If the fund is an AIF and open to retail investors, the illiquid nature of investments should be clearly stated. Where no past performance records are available, the reward profile may only be represented by reference to the benchmarks past performance or to the objective return (if applicable and already referenced in the fund’s legal/regulatory documents);
  • costs: reference to costs should include an explanation to allow investors to understand the overall impact of costs on their investment amounts and expected returns. This should include any applicable warnings regarding currency and exchange rate fluctuations where costs are referenced in a currency other than that which the target investors are residents;
  • past performance: past performance should be based on historical data with any significant changes to previously reported past performance data being prominently disclosed. The past performance data should be followed by this statement: “Past performance does not predict future returns.” Where past performance data is not available, any simulations should only be based on pertinent information e.g. based on performance of another share class in the same fund where they have substantially the same features or where feeder fund vehicle simulated performance can be based on the master fund (as long as the feeder only invests via the master and is substantially similar in characteristics);
  • expected future returns: should only be based on reasonable assumptions supported by objective data, disclosed only per fund and where applicable, preceded with the following statements:
    • the scenarios presented are an estimate of future performance based on evidence from the past on how the value of this investment varies, and/or current market conditions and are not an exact indicator. What you will get will vary depending on how the market performs and how long you keep the investment/product”;
    • future performance is subject to taxation which depends on the personal situation of each investor and which may change in the future”; or
    • investments may lead to a financial loss if no guarantee on the capital is in place.”
  • sustainability: information related to sustainability should not outweigh the extent to which the investment strategy of the fund actually integrates sustainability-related characteristics or objectives.


The Guidelines provided for in the Final Report will be published on ESMA’s website and will apply 6 months after the date of publication.

To review the Final Report, please see here.

For more information, and any guidance or advice on marketing AIFs and UCITS in the UK Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.