MiFID II: Asset managers to rely less on third-party research [updated]

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More than three-quarters of European investment professionals expect to source less research from external providers after MiFID II is implemented in January, according to a survey by the CFA Institute.

The poll of 365 CFA members from across Europe found that 78% expected to source less research from investment banks, while 44% said they would beef up their internal research capabilities.

Rhodri Preece, head of capital markets policy for EMEA at the CFA Institute and author of the report, said the organisation supported the aims of MiFID II but warned “the rules are not a panacea”.

“Some respondents were concerned about unintended consequences, including a decrease in the availability of research and a reduction in research coverage,” Preece added.

MiFID II requires asset managers to unbundle the cost of investment research from that of trading securities, which in turn requires an explicit price for research to be set. So far the vast majority of managers have decided to absorb research costs onto their balance sheets, with just Fidelity and Amundi among Europe’s biggest providers currently planning to pass the cost on to clients.

A spokeswoman for Amundi told IPE the firm had not made a final decision on the matter, although CEO Yves Perrier has given a strong signal that the company was leaning towards passing the costs on.

Respondents to the CFA survey predicted an average annual cost of 10 basis points for equity research, and 3.5 basis points for fixed income, currencies and commodities. However, the CFA noted that there was a “wide range of responses”.

CFA members working at providers running more than €250bn were more likely to expect their employer to pick up the cost of external research (67%), while 42% of those working for managers with less than €1bn expected this.

Overall, 53% of respondents expected their employers to foot the research bill, with 15% expecting them to pass it on to clients. One in five were unsure and 12% expected a mixed attribution of costs.

The CFA added: “Respondents raised concerns over a possible competitive disadvantage for smaller firms, echoing industry fears that the changes could result in the loss of some small businesses and further industry consolidation in favour of major global organisations.”

Who pays? How Europe’s top institutional managers will pay for research

IPE is tracking asset managers’ decisions on the unbundling of MiFID II research costs based on our annual list of the Top 120 European institutional managers.

So far, 49 managers have declared their intentions, with just four planning to charge clients directly. Amundi and its subsidiaries Pioneer and CPR will charge clients, as will Fidelity as part of a global overhaul of its equity fund fee structure.

For updates/queries relating to this list, please contact

Last updated: 21 November 2017

CompanyAUM (€m)Who pays?
Legal & General IM792,950Manager
Insight IM537,983Manager
Aberdeen Standard Investments393,759Manager
State Street Global Advisors304,949Manager
Deutsche Asset Management230,789Manager
Goldman Sachs AM223,210Manager
Credit Suisse AM215,458Manager
UBS Asset Management169,643Manager
JP Morgan Asset Management131,707Manager
AXA Investment Managers125,466Manager
Allianz Global Investors91,402Manager
HSBC Global AM90,636Manager
Robeco Group80,105Manager
Morgan Stanley IM76,776Manager
Northern Trust AM67,379Manager
Union Investment63,812Manager
Columbia Threadneedle Inv.63,545Manager
Vanguard Asset Management61,837Manager
Baillie Gifford & Co52,857Manager
Vontobel Asset Management51,276Manager
Record Currency Management48,552Manager
Newton Investment Management43,719Manager
Aviva Investors42,856Manager
CBRE Global Investors41,000Manager
Janus Henderson Investors40,997Manager
Erste Asset Management37,606Manager
NN Investment Partners36,382Manager
Pioneer Investments34,059Client
Hermes Investment Management33,423Manager
Kempen Capital Management32,274Manager
RBC Global AM31,441Manager
CPR Asset Management27,536Client
Russell Investments24,922Manager
Muzinich & Co24,648Manager
MFS Investment Management24,643Manager
Fidelity International23,281Client
Investec Asset Management21,142Manager
Franklin Templeton Investments19,440Manager
BlueBay Asset Management18,565Manager
J O Hambro Capital Management14,773Manager
T Rowe Price11,759Manager
First State Investments11,282Manager
TwentyFour AM9,175Manager

Notes: AUM figures relate to European institutional assets only, and are expressed in euros. Data from IPE’s Top 400 Asset Managers survey, correct to 31 December 2016.

This article has been amended to clarify that Amundi has yet to fully confirm its intentions regarding research cost unbundling.

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