MiFID II: First State team ends client charges for research

Calculating_feesA specialist Asian investment team within First State Investments is to pay future broker research costs itself rather than charge clients.

First State Stewart Asia, which has offices in Edinburgh as well as Asia and invests $22 billion (€20.6 billion) for a global client base, is making the move in line with MiFID II rules on unbundling research costs from commissions paid to brokers.

The unbundling rules, which commence in January 2018, are intended to make fund managers’ costs more transparent and could put pressure on firms who take a different approach and charge clients.

Asked about the wider unbundling policy of First State Investments, a spokesperson said that the firm, which manages the equivalent of €138.6 billion, is to roll out its approach to commission unbundling on a “team-by-team basis supporting the different investment philosophies and styles of each”.

The other teams’ approach will be communicated to clients ahead of the MiFID II deadline of January 3, 2018.

First State Stewart Asia started to unbundle research costs from April 1. All broker-related research and advisory services consumed by the team will no longer be paid for from client dealing commissions. Instead the team will compensate the providers of research by making separate payments directly from their own resources, the firm said.

As a result, all portfolios managed by the team are moving to execution-only dealing charges.

“This change reflects what we believe is in the best interests of the clients of First State Stewart Asia and will help to meet the requirements of the changing regulatory environment; in particular MiFID II,” a statement said.

ITG, a broker, recently found evidence suggesting 18% of French asset managers will pay their own research costs.

©2017 funds europe

Sponsored Profiles

SPONSORED FEATURE: Smarter than beta

Jun 14, 2017

‘Smart beta’ investing is rapidly becoming a popular alternative to both conventional passive management and traditional active management.

SPONSORED FEATURE: Smart beta: Unlocking key drivers of return

Jun 14, 2017

Manuela Sperandeo, iShares Head of Specialist Sales EMEA, tells Funds Europe how investors can leverage smart beta strategies to target numerous outcomes.

SPONSORED FEATURE: Minimum variance indices: Rewriting the rules

Jun 14, 2017

The FTSE Russell indices tracked by lyxor lead to fewer specific risks, fewer valuation and crowding issues and more consistent performance.

SPONSORED FEATURE: The reflationary environment

Jun 06, 2017

Funds Europe talks to Andreas Wosol about the implications of a return to reflation and why the value part of the European equity market could support investors in such an environment.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.

Roundtables & Panels

TRENDING: Smart beta indices continue onward march

Jun 14, 2017

We asked five investment experts how smart beta indices have performed against cap-weighted indices over the past year and what the investment outlook suggests about the prospect for different investment factors.

SMART MONEY: Following the smart money

Jun 14, 2017

We asked six investment professionals about the emphasis they are placing on smart beta and active ETFs and how platforms are adopting these products.