There was good news for UK investors when the Financial Conduct Authority published a long-awaited report on the asset management industry.
The report concluded that fund charges are often too high, that there is a lack of genuine competition on price and that investors are not being given a clear picture of how much they are paying to invest.
Announcing its publication, Andrew Bailey, the FCA’s chief executive said: “We want to see greater transparency so that investors can be clear about what they are paying and the impact charges have on returns.”
Although this is only an interim report — the final report isn’t due for several months — it’s being seen as a major victory for firms like Carbon as we have been campaigning for clearer charges and a better deal for end investors for years. The 4th of our seven investment principles is “Active buying and selling adds significant cost and erodes value”.
The 200-page report is very wide-ranging, and several different parties are criticised, including financial advisers, consultants, governance committees and fund trustees.
Specifically about fund management the reports says this:
The report proposes several changes, of which these are the two most important:
In tomorrow’s blog we look at reactions to the report and what it means for the active vs. passive debate.
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