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Fund manager shorting fears downplayed after FCA fees crackdown


Experts have played down fears that large investors will start betting against the share prices of smaller active managers as a consequence of the FCA’s fees crackdown.

Fund giant BlackRock began shorting rival Jupiter in October, according to reports, a month before the FCA published a study attacking over-charging managers.

But Architas investment director Adrian Lowcock says while fund groups are not making excessive margins, they are still “fairly profitable” and pressure on cost from the FCA “will not change the industry overnight”.

Chelsea Financial Services managing director Darius McDermott adds: “Share prices can drop suddenly but that normally reflects serious issues in the business. I have every confidence that is not the case with Jupiter.”

Lowcock says “all fund groups” are vulnerable to share price changes. He says the least vulnerable, however, might be those with higher passive exposure such as Legal & General.

Asset managers that belong to bigger groups and are more diversified, such as Axa, M&G, HSBC and Fidelity International, are also less vulnerable to any war on costs.

Lowcock also cites the strength of boutique firms such as Woodford Investment Management, which are privately owned or are not built on asset gathering.

He says: “The industry is already adjusting on pricing since RDR. But for active managers it is not just about costs but also performance. Only over time, though, you might get fund groups to adjust to the FCA’s crackdown as well.”


BlackRock bets against Jupiter over asset management study

BlackRock has bet against the share price of rival Jupiter as analysts point to Jupiter as being most exposed to the fallout from the FCA’s asset management study. The Financial Times reports BlackRock began shorting Jupiter in October, and increased its short position from 0.88 per cent to 0.94 per cent last month when the […]


FCA chief attacks managers keeping £100bn in ‘partially active’ funds

Financial Conduct Authority chief executive Andrew Bailey has hit out at fund managers for keeping more than £100bn in funds that are only “partially active.” The FCA is “not saying passive management is better than active”, Bailey says, but cites “strong and consistent margins” and unwavering charges in active funds compared to falling passive costs […]

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