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Revealed: latest round of AM firms absorbing research costs

Citywire Selector showcases the latest group of investment firms set to foot the bill under MiFID II.

The cost question continues

Last month Citywire Selector ran a list of the asset management firms that had either decided to absorb costs or charge for research payments once the MiFID II regulation comes into effect in January 2018.

While several firms have since switched from charging to absorbing – with some such as Carmignac giving a strong indication as to why charging makes more sense – a number of companies were undecided. In this update, Citywire Selector uncovers the firms who have recently announced plans not to charge their clients.

Aberdeen Standard

Aberdeen Standard Investments – led by Martin Gilbert and Keith Skeoch – has said it will absorb all research costs when the new MiFID II legislation comes into effect next year. This follows a comprehensive review earlier this year, extending the approach taken by Aberdeen Asset Management to the newly combined entity.

Announcing its plan, the company said: ‘External research is an important and valuable input to our exceptional in-house research capabilities and we remain committed to our portfolio management teams’ ability to maximise active research insights across regions and asset classes for the benefit of all clients.’

J O Hambro

Active asset management company J O Hambro Capital Management has said it will pay for external research used by its fund management teams from 2018. This will come at an estimated cost of £5 million per year (€5.5 million) to the company.

Ken Lambden (pictured), JOHCM Group CEO, said: ‘As a high conviction active fund manager, our proprietary research is key to delivering investment outperformance for our clients, but we also value access to selected research generated by external parties.

‘The new MiFID II regulations increase the level of transparency around the cost of research services, and we feel that under these regulations the direct payment of this cost is in the best interests of our clients’

GAM

Swiss group GAM has announced that it had decided to absorb all research costs from January 2018. It said this underlines its commitment to placing clients' interests first, while ensuring sustainable growth for all stakeholders. GAM currently expects research costs to amount to mid-single-digit millions of Swiss francs per annum.

Vontobel

Fellow Swiss investor Vontobel Asset Management also decided to absorb research costs for all funds and client mandates that are subject to MiFID II rules. According to the firm, all the additional costs will amount to low-single-digit millions of Swiss francs per year. Those are already accounted for in the firm's 2020 objectives, as published in August.

Commenting on the decision, Axel Schwarzer, head of Vontobel Asset Management, said: ‘This decision creates clarity for our clients and makes our cost structure more transparent. We also see an opportunity for the client to benefit from more focused research in investment decisions.’

RAM AI

Rounding out the Swiss view, RAM Active Investment is also absorbing costs. Thomas de Saint-Seine (pictured), CEO and senior equity fund manager, said: ‘At RAM AI, we have always supported all research costs for our Systematic fundamental funds, as they purely rely on in-house R&D.

‘Regarding our tactical fixed income funds, we will absorb external research costs under MiFID II in order maintain the current level of fees, quality and value to all our investors. This is done in order to increase our trusted and transparent relationship with our investors.’

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Thomas de Saint-Seine
Thomas de Saint-Seine
69/596 in Equity - Europe (Performance over 3 years) Average Total Return: 42.55%
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