Ashmore Group, the investment manager focused on emerging markets, has broken its silence on how it will pay for investment research now that new regulation has come into force.
The last big asset manager to declare its intentions publicly, Ashmore – which has around $65bn (£48bn) in assets under management – has followed the majority of its peers and decided to absorb the cost of research rather than billing it to clients.
Although the firm has taken some time to confirm this decision, the burden of paying for research for Ashmore is likely to lighter than for many of its competitors. Emerging markets asset classes – especially the fixed income space – are much less populated by research, so there would theoretically be less for Ashmore to spend on.
Asset managers have been faced with the decision of whether to absorb the cost of research or charge it separately to clients, after the second Markets in Financial Instruments Directive (Mifid II) – which finally kicked into force today – banned them from bundling the cost in with the commission paid to brokers.
River & Mercantile, which has £31bn under management and advises on a further £27bn of assets, said last month that it would also absorb research costs and estimated the cost to be between £1m and £1.5m per year. However Liontrust, which manages a comparatively small £10bn, had estimated its research costs to be about the same.
Fidelity International is one of the few big-name fund managers to be passing the cost of research on to clients.