iShares urged to align TER for ETFs with client cost
Share
Evercore Pan Asset is lobbying iShares to align the total expense ratio for exchange traded funds more closely with the true net cost for clients.
Evercore chief executive Christopher Aldous says the firm is lobbying the ETF provider to stop quoting the annual management charge as the TER because often the TER for ETFs is much cheaper.
He says: “On ETFs, there is a really annoying quirk which we are lobbying iShares to do something about. What I would like to see is that the stated TER for ETFs more closely represented the actual net charges paid by the client.
“With all these ETFs, they add on various bits and pieces they get from stock lending so in fact the mainstream ETFs are actually cheaper than the AMC.”
From the IFAs’ perspective, Aldous says the cost illustration could make an investment solution look artificially unattractive. It will also make other solutions with their much lower stated management costs look more attractive, he says.
He says: “IFAs are very sensitive about these costs because it is not their money, it is their clients. Why would you want to quote a number which is higher than the true cost?”
iShares Europe senior business development officer for the IFA sector Julian Hince says: “There is a big debate going on around cost and it is certainly being explored very rigorously.”
Readers' comments (1)
Stan Kirk | 26 Nov 2009 5:13 pm
I'm all for more accurate information but to be able to compare 'apples with apples', the same information has to be available from everybody - TER disclosure then has to apply to all, easy enough on funds being marketed as providers have incentive to provide it, often difficult unless FSA requirement on closed funds or old products being replaced - FSA rules do require a 'fair' cost comparison on replacement business.
Unsuitable or offensive? Report this comment