Baillie Gifford has slammed 'misleading' new key information documents (KIDs) rules.
The rules were issued within packaged retail and insurance-based investment products (Priips) regulations, which came into force on 1 January.
They are designed to make it easier for retail investors to compare products, with managers expected to provide details on how they expect funds to perform in various market conditions.
Baillie Gifford highlighted these demands are simply based on past performance and could lead to investors to receive poor information at the point of sale.
'We are extremely disturbed by the requirements of the key information document. We do not believe that reliance on past performance data is ever a sufficient guide to the many possible future outcomes in stocks and markets,' Anderson said.
'The persistent and steady rises characteristic of the last five years seem especially questionable as a guide. We consider the most important risks in markets to be intrinsically unpredictable and unmeasurable.
'We would also highlight that the emphasis on the short-run demanded in the KID, seems to us to be acutely misguided.'
He added: 'We continue to stress to retail shareholders that we focus, as we believe they do, on building capital in the long-term. We believe that an undue preoccupation with short-term volatility undermines this commitment – and indeed the ultimate purpose of financial.'
Such is the disconcertion in the investment trust world, Baillie Gifford compliance and legal head Graham Laybourn revealed a number investment trust boards have written to the regulator.
Laybourn said: 'We always look to implement our regulatory obligations in a thoughtful and responsible manner, but it is unsatisfactory that with the latest Priips key information document we have had to comply with the strict requirements of the new rules, notwithstanding that some of the outcomes produced are inappropriate.'
He added: 'Such is the concern of this new KID disclosure, we have seen the independent boards of a number of our investment trust clients writing directly to the FCA.
'We fully support the views expressed by our investment trust directors that these mandated performance scenarios have the potential to set unreasonable expectations when being read by our retail investors.'
Baillie Gifford's comments followed criticism by leading economist, and Scottish Mortgage board member, John Kay, in an article for the Financial Times.
'The KID tells you that if you invest in the shares of SMIT you might in a “moderate” scenario earn more than 20% a year over the next five years, and over 30% in a “favourable” one. Even in “unfavourable” circumstances, you could anticipate an annual return of over 10%,' Kay wrote.
'The KID document does not explain what “moderate”, “favourable” and “unfavourable” mean, but a reasonable person might infer that “moderate” would not be as good for investors as the past few years have been and that “unfavourable” might describe a market downturn — perhaps similar to that experienced in 2000-2 or 2008-9.'