overcomplicated reporting hampering am industry

Fund performance data and historical costs need to be simplified if the asset management industry is to fulfil its potential to make an important and positive difference to consumers and the economy, according to Daniel Godfrey.

overcomplicated reporting hampering am industry


The IMA chief executive is calling on stakeholders to work together to develop a more simple methodology to track annual fund costs and their impact on performance, and to establish adjustment factors which allow for anomalies and unexpected circumstances.

He claims that, in the pursuit of perfection, experts are asking too much of a solution and demands for personalised data for each investor, ten decimal place accuracy and data that is of equal use for a unit holder as for a prospective investor has made matters too complicated.

In his blog, Godfrey wrote: “As an industry, this search for perfection has left us accused of obfuscation – that we must have hidden charges and we want things to stay that way. It may be unfair, but it’s up to us to develop ideas that achieve something really useful and robust if we want to move on in an environment of trust.”

Other costs, such as initial and exit costs and advice and platform costs can be disclosed separately.

Using this method will enable a series of year-on-year data points to be built, which can then be used by both potential and existing clients.

Godfrey said: “In respect of potential future costs, the disclosure requirements of the KIID are a pretty good measure (which should be extended to all investment funds). The IMA’s Enhanced Disclosure guidance adds even more information – but the inevitable limitation is that we cannot know all future costs. The fact that we do know all actual costs and actual performance for the past is why the single-figure historic cost number is so important.”




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