Fund Management

Fund Behemoth Backtracks On Billing Clients For Research

Josh O'Neill Assistant Editor 26 February 2018

Fund Behemoth Backtracks On Billing Clients For Research

The Bermuda-based asset manager has reversed its decision to let clients pick up the research bill after coming under pressure to pay out of its own pocket.

Fund giant Fidelity has upended its decision to pass equity research costs onto clients, just a month after the European Union’s MiFID II regulations entered into force. 

The move reverses an announcement made last October when Fidelity, which oversees more than $2 trillion of assets, said it would not absorb costs incurred by the directive, which transposed into law on 1 January. The second iteration of the EU’s Markets in Financial Instruments Directive requires asset managers operating in Europe to “unbundle” the costs of equity research, separating them from management and service fees, among other things.

Jason Hollands, managing director of business development and communications at Tilney Group, the UK investment manager, said Fidelity’s announcement was “welcome news” and “a clear admission” the firm had “got it wrong”. 

He said: “In this environment I do believe that firms such as Fidelity, which has long prided itself on the scale and strength of its own in-house platform and has therefore been much less reliant on external research, are in a relatively strong position.”

He added the move will “heap pressure” on firms deciding not to absorb costs to change their minds. 

Although initially there were concerns that MiFID II could push smaller players against the wall, the vast majority of European asset managers have chosen to front research bills themselves, with the exception of Carmignac and Deka, according to data compiled by the Financial Times. 

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