Asset managers U-turn on Mifid II research costs

Schroders Investment Management, Union Investments, Mifid Ii, Mifid 2, Financial Regulation, Blackrock

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The asset managers previously said they would pass the extra cost on rather than shoulder the burden in-house, but performed a U-turn on Friday, one day after investment giant BlackRock announced it would absorb the cost itself.

German asset manager Union Investments also U-turned on Friday on its previous decision to pass the cost on.

The decision to make clients pay for external research used once Mifid II rules on research unbundling come into force flew in the face of industry consensus after the majority of asset managers said they would absorb the cost.

“While we have met the main research principles of Mifid II for a number of years, we have concluded that we should absorb the cost of research for those clients affected by Mifid II,” Schroders chief executive Peter Harrison (pictured) said in a statement published on the company website.

Union Investment also announced on Friday it will not charge external research costs to its funds, after having previously said it would.

It claimed the decision “was made after the completion of several in-house projects, one of the aims of which was to calculate future research costs”.

The change of tack comes after industry heavyweight BlackRock said on Thursday it would absorb all external research costs under Mifid II, following a string of similar announcements from other asset management companies over the past couple of weeks.

Research published last week found taking on the cost of research marked a 2–4% increase in operating costs for asset managers, and a 4–7% fall in revenue.

It added the impact would fall heaviest on small and medium-sized businesses, where the cost of absorbing research expenses would prove “disproportionately burdensome”.

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