Deloitte: High alpha fund managers to benefit from RDR

24 October 2011

Deloitte, the business advisory firm, says the implementation of the Retail Distribution Review (RDR) at the end of 2012 will have a bigger impact on investment managers than many believe.

The firm’s next investment management point of view identifies four groups that will benefit from the Review. They are:

• Investment managers who can demonstrate consistent high alpha. Advisers should be able to justify higher investment charges to consumers;
• Passive funds – including exchange traded funds and investment trusts – are likely to gain share as commission payments on other funds ends;
• Discretionary asset managers will attract business from advisers who lack the skills to recommend and monitor investment portfolios;
• Fund supermarkets who can help advisers manager their customers’ assets in one place.

Andrew Power, lead RDR partner at Deloitte, said: “The implementation of RDR will shake up the investment market more than many fund managers realise. The ending of commission payments for recommending funds and the switch to adviser charging will make consumers more sensitive to fund charges. That will challenge active fund managers who cannot demonstrate outperformance; if they cannot reduce their fees it is likely advisers will recommend cheaper passive funds.”

Press release

© Deloitte LLP