Star fund managers to benefit most from RDR, say financial advisers

  • Almost half of IFAs plan to allocate more capital to ‘star’ fund managers post-RDR
  • Significant minority expect to favour funds with long-term performance objectives
  • But almost two-thirds say they have no plans to scrutinise charges more closely after 2013

Almost half of financial advisers believe the Retail Distribution Review will result in more capital being allocated to ‘star’ fund managers, according to new research from Ignis Asset Management.

The research, conducted in late 2010 and based on more than 450 responses, reveals that 47.1% of advisers believe the RDR will encourage IFAs to focus more heavily on well-established, high-profile managers. Only a tiny minority (3.9%) believe the RDR, due to come into force in 2013, will prompt advisers to focus less on high profile managers, with the balance of respondents (48.9%) saying regulatory change will make no difference to their approach.

While many advisers are set to increase their focus on star managers post-2013, a significant minority also plan to shift attention to funds with longer-term performance horizons. More than four in 10 advisers (41.3%) say the new regulation will result in IFAs investing more in funds with longer-term performance objectives, with only 5.8% expecting to favour products with a shorter-term focus. Just over half (52.8%) believe the RDR will have no impact on their investment horizon.

Two areas in which the RDR is expected to have surprisingly little impact are fees and performance. While just over a third of advisers (33.7%) say they will scrutinise fund charges more closely following the RDR, almost two-thirds (65.4%) say it will make no difference to their approach to fund selection.

Moreover, the majority of advisers do not expect their tolerance of underperformance to lessen post-2013. Just over a quarter of respondents (25.3%) say the RDR will shorten the length of time they tolerate underperformance, while 72.8% believe it will have no impact.

Commenting on the research, Rob Page, Marketing Director, Ignis Asset Management, says: “Whether or not it was intended to do so, it seems the RDR will cause a significant shift of capital towards so-called ‘star’ fund managers as many advisers focus their attention on the better-known names with proven long-term track records. It also seems set to increase the focus on funds with longer term investment horizons – but it will not, surprisingly, have a bearing on most advisers’ attitude towards charges. Given expectations that management fees would come under pressure post-RDR, that seems to contradict conventional thinking. It suggests that the majority of advisers will continue to value track records and reputation above all else.”

-ends-

All statistics sourced: Ignis Asset Management Investment Adviser Survey, November 2010

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Star fund managers to benefit most from RDR, say financial advisers

  • Almost half of IFAs plan to allocate more capital to ‘star’ fund managers post-RDR
  • Significant minority expect to favour funds with long-term performance objectives
  • But almost two-thirds say they have no plans to scrutinise charges more closely after 2013

Almost half of financial advisers believe the Retail Distribution Review will result in more capital being allocated to ‘star’ fund managers, according to new research from Ignis Asset Management.

The research, conducted in late 2010 and based on more than 450 responses, reveals that 47.1% of advisers believe the RDR will encourage IFAs to focus more heavily on well-established, high-profile managers. Only a tiny minority (3.9%) believe the RDR, due to come into force in 2013, will prompt advisers to focus less on high profile managers, with the balance of respondents (48.9%) saying regulatory change will make no difference to their approach.

While many advisers are set to increase their focus on star managers post-2013, a significant minority also plan to shift attention to funds with longer-term performance horizons. More than four in 10 advisers (41.3%) say the new regulation will result in IFAs investing more in funds with longer-term performance objectives, with only 5.8% expecting to favour products with a shorter-term focus. Just over half (52.8%) believe the RDR will have no impact on their investment horizon.

Two areas in which the RDR is expected to have surprisingly little impact are fees and performance. While just over a third of advisers (33.7%) say they will scrutinise fund charges more closely following the RDR, almost two-thirds (65.4%) say it will make no difference to their approach to fund selection.

Moreover, the majority of advisers do not expect their tolerance of underperformance to lessen post-2013. Just over a quarter of respondents (25.3%) say the RDR will shorten the length of time they tolerate underperformance, while 72.8% believe it will have no impact.

Commenting on the research, Rob Page, Marketing Director, Ignis Asset Management, says: “Whether or not it was intended to do so, it seems the RDR will cause a significant shift of capital towards so-called ‘star’ fund managers as many advisers focus their attention on the better-known names with proven long-term track records. It also seems set to increase the focus on funds with longer term investment horizons – but it will not, surprisingly, have a bearing on most advisers’ attitude towards charges. Given expectations that management fees would come under pressure post-RDR, that seems to contradict conventional thinking. It suggests that the majority of advisers will continue to value track records and reputation above all else.”

-ends-

All statistics sourced: Ignis Asset Management Investment Adviser Survey, November 2010

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