The credit ratings agency said the new EU financial legislation would accelerate a move to cheaper passive funds, sharpen competition and drive consolidation.
It could also lead to more regulation, as a result of detailed costs and other data becoming visible for the first time.
Depending on their asset allocation and responses to ongoing pressures, European asset managers’ effective fee rates could fall 10%-15% over the next three years as a result of cost disclosure requirements under MiFID II, according to Moody’s.
MiFID II was also likely to accentuate a trend for asset managers to shift from offering traditional benchmark-driven funds to offering outcome-oriented solutions that aimed to meet investors’ financial goals, the agency said.
Managers were already on this path in a response to scepticism about the value of active management, said Moody’s, but new MiFID II product governance and product suitability rules could push them further in this direction.
Coming on top of fee pressure, the cost of complying with MiFID II was likely to lead to consolidation among smaller asset managers because they lacked the scale to absorb the extra costs, according to Moody’s.
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