Indeed, research published by Capital Access Group (CAG) found research unbundling could lead to widespread job losses for analysts in a post-Mifid world. CAG’s research predicted just 430 analysts will hold on to their position out of the current total of more than 1,200 covering FTSE All-Share companies.
Andrew Morgan, who co-manages the Alpha r2 range with Gary Waite, adds that while the fundamental intention of Mifid II is well-meaning and difficult to argue with, if the sum of the measures means there is less competition in the industry then the client could potentially lose out.
“It is generally a good thing but if it means you wipe out a whole host of competition, who knows what that does to the client,” he says.
Own-goal
Meanwhile, Andy Merricks, head of investment at Skerritts and fund manager on the 8AM Global Focused fund, says it is hard to find any positives that are worth all the cost in terms of time spent and expenditure.
Merricks’ biggest worry, and something he describes as a “potentially a huge own goal for investors”, is the necessity for portfolio managers to report to clients every quarter and let them know within 24 hours if their investment has fallen by 10%.
“This couldn’t be a clearer definition of short termism, yet short termism is one of the very characteristics that regulators have railed against in recent years,” he says.
“Everyone knows, or apparently everyone does not know within the corridors of power that beget directives, that investors who look too regularly or trade too frequently do worse over the longer term. And yet this is precisely what will happen if the retail investor is given quarterly valuations and is alerted to a 10% fall in value.
“It’s well-intentioned madness and is horrible in its inevitability.”
