Performance Fee Guidelines | Entry into Effect

Evelyn MaherPartner, Bonn Steichen & Partners


On 3 April 2020, ESMA published its final guidelines on performance fees in investment funds – applicable to UCITS and certain types of AIFs (the “Guidelines”).

As a reminder, the guidelines provide comprehensive guidance to fund managers when designing performance fee models for the funds they manage, including the assessment of the consistency between the performance fee model and the fund’s investment objective, policy and strategy, particularly when the fund is managed in reference to a benchmark. For further information on the content of these performance fee guidelines, check our previous Newsletter.


On 5 November 2020, ESMA published the translations of the guidelines meaning that the guidelines are  effective since 6 January 2021 further to CSSF’s Circular 20/764 regarding guidelines on performance fees in UCITS and certain types of AIFs (the “Circular”).


As stated in the Circular, the CSSF will integrate the Guidelines into its administrative practices and regulatory approach with a view to promoting supervisory convergence in this field at European level as of the date of application of the Guidelines.

Managers/AIFMs of any new funds created after the date of application of the Guidelines with a performance fee, or any funds existing before the date of application that introduce a performance fee for the first time after that date, should comply with these Guidelines immediately in respect of those funds.

Managers/AIFMs of funds with a performance fee existing before 6 January 2021 should apply these Guidelines in respect of those funds by the beginning of the financial year following 6 months from 6 January 2021.

The Guidelines will also be applicable as of 6 January 2021 for any newly created compartments of an existing umbrella, i.e. in relation to any new compartment setting up a performance fee at compartment or classes of units/shares level.