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Fund Forum: open architecture a hot topic

FRANCE - Who cares about open architecture? Janus’s director of marketing Richard Garland certainly does and used the platform at Fund Forum to accuse third party platform distributors of ‘raping’ fund promoters.

His complaint is that open architecture platforms such as that offered by Credit Suisse do not operate in a way that gives fund groups the ability to operate on a level playing field. Garland engaged in a slanging match with CSFB vice chairman Jeff Peek, claiming that taking a one to 1.5% fee from the promoter was making it impossible to operate.

Heinrich Wegmann of Credit Suisse Asset Management was the first but by no means last person to mention open architecture from the speaker platform.

His view is that this method of third party fund distribution is a mixed blessing: “It was a child of the bubble years and has encouraged a proliferation of funds. However I think that the trend may have peaked in that we are now seeing distributors being more selective.”

Wegmann also suggested that fund managers should switch their focus towards aspects of the business that add real value. “Too many asset managers are getting caught up in the day to day processes.

“Real value exists in working on providing a more level asset mix, a better balance between large and small caps and between active and passive portfolios.”

Although the conference once again failed to agree on some of the more fundamental changes necessary for the benefit of clients, specifically better communication, there was at least some recognition of the need.

Wegmann stated that fund promoters and distributors have a duty to better explain what they do and to actually deliver. During the CEO debate, Investec’s chief executive Hendrik du Toit was the only fund chief who seemed genuinely committed to the idea of greater communication.

He said: “This is a conservative industry – we are managing people’s money and we need to improve our communication with simple messages.”

Commenting on the suggestion that the industry sponsor a generic advertising campaign to better inform investors, he added: “We compete like hell which makes it difficult for us to speak as an industry. Perhaps first of all, there is a need to understand what it takes to get people to return to your product.”

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