To date, the majority of the world’s largest asset managers — including BlackRock, Vanguard and Schroders — have said they will pay for research out of their own pockets, rather than passing the costs on to investors. As this trend gathers pace, experts say big asset managers will be well-placed to gain market share, as the rules put smaller operators without deep pockets at a competitive disadvantage.
Many now expect an acceleration of the consolidation trend once Mifid II comes into force. Fund boutiques and smaller hedge funds could be sold to larger asset managers, or find themselves absorbed into a large organisation under a multi-boutique model where several investment houses operate under an umbrella parent.
Nearly half of companies with more than €250bn in assets under management expect the combined cost of research and trading to come down under Mifid II, compared with 29 per cent of companies with less than €1bn under management, according to the CFA Institute. As banks and brokers continue to frantically negotiate on the pricing of research packages, an institution’s size — and therefore clout — will also come into play.
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