JPM joins fund firms pledging to swallow research costs

JP Morgan Asset Management has committed to meeting the costs of any external research after fund groups are forbidden from steering reciprocal trade to banks which off them sell-side analysis.

The house joined Vanguard, Woodford Investment Management, M&G, Hermes and Jupiter in pledging to meet the cost of research internally, following the imposition of Mifid II rules at the end of the year.

‘JPMAM already commits substantial resources to our internal research capabilities and we have not made any changes to our internal research teams as a result of this policy change,’ said a spokesperson.

‘We also utilise external analyst research where we believe it can add value to client portfolios.’

The tough new European rules have sparked a standoff between banks, brokers and asset managers over research costs. It has also seen a host of new services launch to help firms meet these additional demands.

With banks still attempting to gauge where research prices will settle once funds managers have to explicitly budget for it, some of the largest fund houses have estimated their total expenditure will be lower than some had earlier anticipated.

Committing to meeting costs internally last week, Vanguard, which manages $4.4 trillion (£3.4 trillion) in client funds, estimated total annual costs of below $5 million: less than a 20th of an £100 million estimate from consultancy business Quinlan Associates.

‘Those research costs will be paid out of the management fees and therefore absorbed in Vanguard’s [profit and loss],’ said the passives giant.

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