Brewin Dolphin’s head of research Matthew Butcher has warned that fund groups could lose out on business if they set their retail distribution review (RDR) pricing structures too high or too late.
Butcher (pictured|) told Wealth Manager that the group would look to increase its allocation to direct securities, guided by its internal research teams, and to passives if fund houses’ RDR pricing structures are unattractive.
He also anticipates that the open-ended funds industry may struggle to grow at the same pace it has done over the past few years.
‘Part of the reason for this is I think fund houses have been quite slow to launch RDR share classes,’ he said. ‘We are very mindful of the total costs to clients for our services and third parties, so in the event that fund pricing is too rich for us on 2 January 2013, we are likely to see increased direct investment in the market and we can cater for that.’
While a number of large fund groups are seeking late mover advantage, he said that Brewins will find it difficult to wait for RDR share classes that are launched in January 2013.
‘In the meantime, what do we do with new money? We will invest in ETFs where pricing is clearer. This is what we are leaning towards,’ he said, highlighting the firm’s internal direct equity and bond research teams.
He also stressed his concerns that advisers use passives appropriately and not simply to improve their margins.
Schroders, Cazenove, Invesco Perpetual, MAM Funds and Guinness Asset Management are among the fund groups that have launched RDR share classes ahead of the January 2013 deadline.
In January, Cazenove Capital Management, for example, set its X share class’s management fee for adviser clients on platforms at 0.75% for equity funds and 0.5% for its multi-manager range and waived its £1 million minimum.
Schroders’ Z share classes, which launched in October, have an annual management charge of 0.75%.