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Exclusive: Paying for research will hurt European AMs, says Carmignac

Exclusive: Paying for research will hurt European AMs, says Carmignac

French asset manager Carmignac has said Europe’s fund industry will be making itself uncompetitive with US rivals if the trend towards absorbing research payment costs continues.

In a statement to Citywire Selector, the company expanded upon the reasons why it had opted to charge clients for research.

This is light of some firms, such as Janus Henderson, at first announcing plans to charge investors before reversing this and stating they would absorb the cost themselves.

Carmignac said it had prepared for and is ready to provide the transparency of research costs according to MiFID II objectives, which come into effect at the start of 2018.

It said: ‘This approach has three significant benefits: additional cost transparency for end investors, ensures the maintenance of wide coverage of European mid-cap companies which are the core of economic growth, and retains low barriers to entry for new asset management companies.’

Commenting on the decision to charge, Carmignac said many companies had been ‘provoked by some ETF fund managers’ to attempt to become cost competitive. However, it said it would be holding firm on its stance.

‘If this becomes the market standard, it will disadvantage European active asset management houses against the US based asset managers, and Europe will lose the three benefits of transparency, research coverage and low barriers to entry.’

‘Whatever the industry as a whole decides, as an active management house with an independent business and mind-set, we will continue to value the cross-fertilization of in-house research with external research.  

‘We will continue to nurture this model, which is central to our investment approach, and we will keep growing our internal team of analysts both on the fixed income and equity sides.’

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