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Vanguard to absorb research costs under Mifid II

Vanguard has confirmed it will absorb research costs rather than charging them to clients under Mifid II.

The $4.4trn fund manager leads its US rivals on making a decision on research costs, the Financial Times reports.

BlackRock, Franklin Templeton, JPMorgan Asset Management and Fidelity International have not yet confirmed how they plan to pay for research despite Mifid II rules coming into effect on 1 January.

Many US asset managers are waiting to see what banks will charge for research and also on guidance from the SEC about direct payments for research.

In the UK, Woodford Investment Management, Jupiter and M&G are among the asset managers that have said they will absorb costs, while Schroders and Man Group plan to pass costs on to clients.

The Financial Times reports Aberdeen, which is a tenth the size of the passives giant, had budgeted $10m annually under the changes.

However, a spokesperson from Vanguard says their own costs are expected to be less than $5m annually.

“Vanguard has extensive internal research capabilities across the investment markets to support both our active and index portfolios. In addition, we use external research where we believe it can add value to our clients,” the spokesperson says.

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Vanguard is primarily a passive fund firm so why do they need research? They’re going to buy and hold shares whatever research may reveal about value!

    • Stanley, that is simply not true. Vanguard is one of the biggest active fund managers in the world. About a 3rd of their assets are actively managed (about 700bn).

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