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Profile: Magnus Spence - there are conflicts of interest everywhere you look

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by Elsa Buchanan on Mar 10, 2014 at 09:48

Refocusing fund range

Dalton’s death also provided an opportunity to refocus DSP’s fund range.

This, Spence says, was an important move. ‘We felt it was necessary because our industry has too many average funds. Clients need to have a good choice, and we didn’t want to add to that long tail of rubbishy funds.’

In the process, DSP arranged its fund offering around five areas: a Japanese fund, run by DSP’s equity team in Tokyo headed by manager Akira Yoshimi, the Asian Opportunities fund which is managed by Citywire A-rated Henrietta Luk, a European fund managed by Leonard Charlton along with North America and global offerings.

DSP made headlines at the beginning of the year, when it cut the annual management charge (AMC) of Nick Mottram’s Melchior Global Equity fund to 0.25% from 0.75%.

Wearing his NCI chairman’s hat, Spence explains the work of the think-tank, and its campaigning against the use of ‘complex jargon’ and risk of ‘uncertain outcomes’ for clients.

‘The industry has tried over many years to inform the consumer but in reality, I suspect it has only served to confuse them a lot more.’

To overcome the problem, Spence is hoping to establish an NCI codes of practice, which would include a scoring system to represent all the different investment types. He speaks enthusiastically about 10 principles that would ‘fit on an A4 paper, with guidance notes’.

‘While there are more codes of practice than hot dinners, we want one that means investors can be comfortable that what they are getting is valuable,’ he says.

First, he points to transparency around dealing commissions. ‘It’s totally bonkers that fund managers incur dealing commission which allows them to buy research, and it doesn’t get reported. If it was reported, a client could wonder why he needs all that dealing commission when he’s a long-term investor.’

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