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Fund managers eye restricted deals but reject preferential terms

Half of fund managers say they will not be offering preferential share classes as they do not believe platforms control distribution, research suggests.

CWC Research and International Finanical Data Services carried out a series of industry interviews last month to assess the impact the ban on rebates will have on fund pricing.

The interviewees included 20 asset managers, including five of the top 10 in the UK by assets under management. They also included interviews with representatives from 15 platforms, four discretionary funds, 13 networks and nationals, two transfer agencies and two data publishing houses.

Two thirds of asset managers interviewed said they were looking at restricted propositions in an effort to secure distribution. CWC Research managing director Clive Waller says this may be through acquisitions or joint ventures.

Among the adviser groups interviewed, over half said they would review fund selection where discounts were between 10 and 15 basis points.

Standard Life has said it has secured an average 9bps discount on the standard clean retail share price.

Investec has said that it will offer a discounted range priced at 65bps on six of its funds to “selected strategic distribution partners”.

Waller says: “Asset managers will want bang for their discounted buck in the form of promised fund flows, which could mean a drift to restricted propositions and vertically integrated firms.” 

Plan Money director Peter Chadborn says: “If firms have scale they can secure good terms but these kind of deals must be transparent. The question is whether these agreements are always in the best interests of the client.”

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  1. It is not unreasonable to expect this of fund managers. they are, after all in business to make profit and that is fine. This will be a catalyst for more firms to end up in the restricted space. That too is fine as long as client understands this. 2014 and 15 will be interesting from this point of view

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