Head of strategy for the Jupiter Independent Funds Team John Chatfeild-Roberts looks at how Mifid II has hit multi-manager funds following Money Marketing’s reporting on the true costs of the funds.
Mifid II provides investors with greater clarity of charges.
However, appreciating the difference between value and price is fundamental; of course price is important but low fees per se do not mean the investor must be economically better off than buying a product which incurs higher charges.
What really matters is an evaluation and comparison of net returns, those achieved after fees.
As multi-manager investors, we too make the same judgements about the funds in which we invest, in just the same way as investors do when investing in the Jupiter Merlin funds we manage.
Where we are able to negotiate discounted fees, we will do so and pass them on fully to our investors. However, some of the best performing funds in the portfolios net of fees are those with the highest charges, and history shows it would have been plain daft to have turned those opportunities away simply because the fees were high; outperformance net of fees is the key. We deal when we need to and endeavour to keep frictional transaction costs down and generally our portfolios have low average turnover.
Some argue that distributors’ model portfolios, dressed up as personalised investments with optically lower fees, are better, cheaper alternatives to multi-manager funds.
The counter argument is that they are often opaque sub-optimal solutions, lacking the tax efficiencies of unitised multi-manager funds, another important factor when weighing up the total value of seemingly comparable products.
Over the years as the industry has developed and become more sophisticated (or just complicated?), so the layers of fees and charges have accumulated, especially when those of the various distributors, advisers and platforms are added.
But fundamentally the investor still has to make a judgement as to whether he or she is getting good value for money as measured by net returns, and where that value is being created. Mifid II provides transparency to help make that evaluation.
The Jupiter Merlin funds have long-established track records of adding value after fees. Mifid II won’t change our approach; so long as we continue to perform, we are confident investors will recognise the value in that.
John Chatfeild-Roberts is head of strategy for the Jupiter Independent Funds Team