Announced in its half-year update, the investment manager confirmed it would absorb all the research costs that have previously been charged to its funds to comply by 1 January 2018, the time Mifid II requirements come into effect.
Though historically, investment firms have bundled together trading and research costs into a single fee, under the new regulation, investment firms must decide whether they want to fund research themselves or pass that cost on to investors.
In particular, this will have an impact on margins of its unit trust business, which took in box profits of £1.8m over the first half of the year and racked up research costs of £0.5m.
However, though the firm expects this to be offset by a reduction in variable remuneration and the momentum of its continued funds growth moving forward.
Funds under management in its unit trusts grew from £4bn to £4.6bn in the six months to 30 June 2017 and reported net inflows of £269m.
Mike Webb, chief executive of Rathbone Unit Trust Management, said: “Both the FCA Asset Management Market Report and Mifid II continue to have a profound effect on our industry and although they present challenges, we are broadly supportive of their proposals.
“In absorbing all costs associated with research, we hope to demonstrate our continued commitment to transparency and best practice, aligning our interests with those of our investors.
“While our margins will not be unaffected, we are confident that the robust growth in assets under management will ensure the continued profitability of our business.”
Rathbone’s total funds under management expanded by 7% over the first half of 2017 to £36.6bn, with the investment management arm climbing to £32bn from £30.2bn relative to the previous year.
Its discretionary fund management business recorded inflows of £108m, up 96.4% from £55m last year.
