Geneva asset management boutique RAM Active Investments has announced plans to absorb all investment research costs for clients, in line with the upcoming Markets in Financial Instruments Directive (MiFID II).
In preparation for the incoming regulation, which will affect all asset managers operating in the European Union, RAM AI will take on all costs of external research commissioned.
Under the rules of the directive, asset managers have three payment options for investment research. These include paying it from their own profit and loss (the choice opted for by RAM AI) or charging clients directly through a Research Payment Account.
With this, additional external research costs under the new directive will be treated in the same way as current internal research fees, paid directly from RAM AI’s own account rather than passed on to clients in the form of an additional charge or fee.
Speaking about the decision, Thomas de Saint-Seine, CEO and senior equity fund manager, said: ‘At RAM AI, we have always supported all research costs for our Systematic fundamental funds as they purely rely on in-house R&D.
‘Regarding our tactical fixed income funds, we will absorb external research costs under MIFID II in order maintain the current level of fee, quality and value to all our investors. This effort is done in order to increase further our trusted and transparent relationship with our investors.’
A split decision
The challenge of deciding who will absorb the costs of MiFID II investment research is a hot topic for many asset managers, with no clear trend emerging.
Large asset managers including JP Morgan AM, Vanguard, Janus Henderson, M&G, Aberdeen, Jupiter. Of the Swiss groups, asset management boutiques Unigestion and Fisch Asset Management have all decided to pay out of their own profit and loss. Zurich wealth manager Altrafin also opted to absorb research costs.
Meanwhile, Carmignac and German asset manager DekaBank are among those who will be charging clients.
This is while some groups remain undecided on their stance.
It has been widely reported that Man GLG will charge for research and pass on the costs to clients. However, when approached by Citywire Switzerland's sister publication, Citywire Selector, they declined to provide an official comment.
A spokesperson for the French group BNP Paribas confirmed that they are still discussing the issue. A final decision has not been made, although it has been reported that the firm will pass on research costs to clients.
Amundi took the decision in April to pass research costs on to its clients. However, it has now adjusted its position by reviewing its options.