Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Hawskmoor to pay for research but questions if it's 'right'

Hawskmoor to pay for research but questions if it's 'right'

Hawksmoor Investment Management is the latest firm to say that it will bear the cost of third party research, although its head of research Jim Wood-Smith has questioned the industry trend.

‘Hawksmoor is part of the growing band of investment and fund managers that will pay for research directly from our own coffers. That is seen to be the ‘right’ thing to do,’ he wrote in a note.

‘But why? Do investors in a fund really believe that their managers should not have research? If the investors do not want to pay to give the managers the tools they need to do the job, then why have they invested in the first place? What about a desk? Or a biro? Or a telephone?’

Wood-Smith (pictured) called for a fund to be judged on its performance after charges at which point investors can vote to stay or leave, but said that managers need the ‘best tools to do the job’ to deliver.

‘That though is not the way it is going to be done. Research costs are being borne by the fund management companies. The same applies to the discretionary fund managers, where we have a separate budget, paid for out of Hawksmoor’s cash flows, to buy the broker research that we need in addition to our own endeavours,’ he said.

‘Some call it progress, others the rush to the lowest common denominator. Never mind though, eh. The solution is to go passive. Buy a tracker and the fund needs no research. It does not care who the constituents are, just a list of names and weightings. The good, the bad, the fraudulent, the polluters. No matter, just follow the index.’

Wood-Smith cited the dotcom boom as an example, noting that the technology, media and telecoms sectors accounted for close to half of the index going into the crash. He also pointed to a number of high profile stock blow-ups, including Baltimore Securities, which was taken over for just £19 million in 2004 after being valued at £7 billion four years earlier.

‘That, ladies and gentlemen, is the sort of share that your zero cost index tracker buys without caring. In fact, the more the price goes up relative to ‘the market’, the more your tracker holds. What a brilliant wheeze,’ he added.

Albeit begrudgingly, Hawksmoor has become the latest investment firm to say it will not pass on the cost of research to investors when Mifid II’s unbundling requirements come into force in January. Others include Woodford Investment Management, M&G and Vanguard.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
CIO Tapes 2: two warnings and a lot of optimism

CIO Tapes 2: two warnings and a lot of optimism

Our group of leading asset management CIOs see a lot of opportunities – and overseas investors are buying UK too

Play Wealth Manager Retreat 2017: size isn't everything

Wealth Manager Retreat 2017: size isn't everything

We asked our delegates at the Wealth Manager Retreat what they think about the recent wave of consolidation in the industry.

1 Comment Play CIO Tapes - part 3: 'passive funds are anti-capitalist'

CIO Tapes - part 3: 'passive funds are anti-capitalist'

Citywire recently gathered three of the UK's leading fund investment heads to discuss their hopes, fears and the issues that their jobs throw at them daily.

Read More
Your Business: Cover Star Club

Profile: Thomas Miller explains its post-restructure plans

Profile: Thomas Miller explains its post-restructure plans

Thomas Miller Investment’s (TMI) head of wealth Matt Phillips has strong opinions about many things

Wealth Manager on Twitter
Managing risk, unearthing returns
  • A-rated Beagles sells down Brewin Dolphin
  • Electoral Commission reopens Vote Leave probe
  • City grandee says HBOS crisis 'worst moment' of his career
  • Ex-OMGI duo enters model portfolio market with new boutique
  • Abolish stamp duty: six wealth managers' Budget wish lists
  • James Carthew: is the Japanese glass half full, empty, or illusory?
  • The Expert View: William Hill, Mitie and Xaar
  • Overnight Markets: Tech shares buoy Wall Street
  • Tuesday Papers: May told to exploit Merkel crisis to reduce Brexit bill
  • Investors brush off German government worries
  • Buy-to-let crackdown? Charles Stanley's 5 Budget calls
  • Brewin Dolphin's south west assets hit £1bn
  • Wealth Manager Top 100 2017: seven hidden fund talents to watch
  • Read More