Aberdeen Standard, Newton, Aviva to cover MiFID II research costs

Newton Investment Management, Aberdeen Standard Investments and Aviva Investors have joined the ranks of asset managers announcing they will absorb research costs under MiFID II regulation rather than passing them to clients.

Aberdeen Standard Investments said its decision extended to the newly combined entity the approach taken by Aberdeen Asset Management earlier this year.

The merger of Aberdeen Asset Management and Standard Life completed in the middle of August.

“External research is an important and valuable input to our exceptional in-house research capabilities and we remain committed to our portfolio management teams’ ability to maximise active research insights across regions and asset classes for the benefit of all clients,” the group said in a statement.

Hanneke Smits, CEO of Newton IM, which is part of BNY Mellon Investment Management, said although Newton had a strong global research capability in place, it did “draw on some external research and analysis to inform and support this process, and to incorporate [a] relevant and healthy challenge to our perspectives”.

This external research is to be paid for by Newton under the MiFID II rules, she said.

Aviva said it believed taking on investment research costs would ensure greater certainty and transparency around its charges and be in its clients’ best interests. 

Other asset managers that have announced decisions recently include Allianz Global Investors, which also said it would assume the costs of external research for funds registered and mandates managed in Europe.

Steve Berexa, global chief investment officer for equities at AllianzGI, said the asset manager had concluded absorbing external research costs was the “efficient and best-suited solution for all parties involved”.

It was also the “obvious” solution, he said, as the majority of AllianzGI’s research was already conducted through the use of internal resource and analysis.

It was also in the spirit of MiFID II, which aims to avoid conflicts of interest in securities trading, he added.

The legislation requiring the unbundling of research costs comes into effect on 3 January next year. The majority of major asset managers that have announced their decisions on this have opted to take the cost onto their own books.