More than eight in 10 pension funds think asset managers should pay for the cost of independent investment research under MiFID II rules, according to a poll conducted by IPE.

The remainder said managers should calculate the cost of the research at a flat rate and pass this on.

The pension funds were polled as part of IPE’s October focus group survey – see IPE’s upcoming October magazine for more.

One pension fund said: “We are totally against passing research costs to our scheme.”

Another added: “The research should be part of the daily job of the asset manager.”

Pension funds have largely been absent from the debate about MiFID II and research costs, with the focus so far being on whether investment managers will pass them on to investors or cover them internally. The deadline for MiFID II implementation is January 3.

Barings is the most recent major asset manager to have publicly announced its decision. Yesterday it said it would absorb external investment research costs for the $288bn (€240bn) firm’s global equity, multi-asset and fixed-income portfolios.

In announcing its decision, Barings said it had been expanding its in-house research capabilities over the past several years, thereby reducing its third-party research costs. It planned to continue expanding its proprietary research capabilities in the coming years in response to client needs.

In total, 34 of Europe’s biggest asset managers have so far declared or advised how they will comply with unbundling rules, according to IPE research.

Record Currency Management told IPE it had made the decision to absorb the costs of any research, and not pass it onto clients.

A spokesperson for Northern Trust Asset Management said that in the EMEA and APAC regions it does not currently use client’s commission for investment research and has no intention of changing that model.

CBRE Global Investors, meanwhile, told IPE it rarely receives investment research from third parties.

“Research typically received by CBRE Global Investors will be from our in-house research team,” said a spokesperson. “In such cases, we will absorb the costs ourselves and will not pass it on to clients.”

Germany’s Union Investment recently announced it, too, would take onto its books the costs of external research, veering away from the position it had previously indicated it would take.

Alexander Schindler, the executive board member responsible for international institutional business at Union, told IPE there was a “clear move” in Germany for asset managers not to charge clients.

Increasing the use of internal research and alternatives such as big data and analytics would follow from such a decision, he said, as well as changing research providers more frequently. 

Company2017 AUM (€m)Who pays?
BlackRock 911,955 Manager
Legal & General IM 792,950 Manager
Insight IM 537,983 Manager
Aberdeen Standard Investments 393,759 Manager
Amundi 309,169 Client
Deutsche Asset Management 230,789 Manager
UBS Asset Management 169,643 Manager
Schroders 139,634 Manager
JP Morgan Asset Management 131,707 Manager
AXA Investment Managers 125,466 Manager
Allianz Global Investors 91,402 Manager
Robeco Group 80,105 Manager
Northern Trust AM 67,379 Manager
Union Investment 63,812 Manager
Vanguard Asset Management 61,837 Manager
Baillie Gifford & Co 52,857 Manager
Record Currency Management 48,552 Manager
Newton Investment Management 43,719 Manager
Aviva Investors 42,856 Manager
CBRE Global Investors 41,000 Manager
Janus Henderson Investors 40,997 Manager
NN Investment Partners 36,382 Manager
Invesco 34,004 Manager
Hermes Investment Management 33,423 Manager
Kempen Capital Management 32,274 Manager
Barings 25,894 Manager
Russell Investments 24,922 Manager
Franklin Templeton Investments 19,440 Manager
BlueBay Asset Management 18,565 Manager
Unigestion 14,968 Manager
J O Hambro Capital Management 14,773 Manager
T Rowe Price 11,759 Manager
First State Investments 11,282 Manager
TwentyFour AM 9,175 Manager

Notes: AUM figures based on institutional assets, taken from IPE’s Top 400 asset management survey, correct to 31 December 2016. MiFID II decisions sourced from company releases and public reports as of 20 September 2017.

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