Man Group Reverses MiFID II Research Decision, Will Absorb Costs

Oct 13 2017 | 7:14pm ET

Just a day after Geneva-based alternative asset manager RAM Active Investments joined the growing roster of companies who will absorb the cost of external research once the EU’s MiFID II directive comes into effect in January, hedge fund manager Man Group has reversed its earlier decision to pass such costs onto clients. 

In tandem with announcing its third-quarter results, Man Group said it would bear the costs of external research for the majority of its hedge funds. The company, which earlier this year said it would not absorb the increased expenses but has been steadily seen as an outlier as the vast majority of buyside firms went the opposite route. Indeed, after initially also saying they would pass such costs onto investors, Schroders, Janus Henderson and Union Investment have since reconsidered and will be absorbing them as well. 

Remaining in the dwindling pool of pass-along companies: Carmignac and Amundi, with BNP Paribas yet to disclose a final decision.

MiFID II, which takes effect on January 3, 2018, requires investment managers to pay hard dollars for research and corporate access services provided by broker-dealers and third-party providers instead of bundling them with commissions. The new rule, designed to increase transparency, has upended the traditional relationship between sell-side institutions and third-party research providers and their buyside clients. 

In the third-quarter earnings announcement, Man estimated the decision’s impact to be about $10 to $15 million pre-tax in 2018. The company had a fantastic quarter, with assets under management rising in every unit and cresting $100 billion firm wide on the strength of $2.8 billion in net inflows.

London-based Man Group PLC, which traces its roots back to the 1783 founding of a sugar coop and brokerage company, managed $103.5 billion as of September 30, 2017 through its five investment management businesses: Man AHL; Man Numeric; Man GLG; Man FRM and Man Global Private Markets. It is the largest listed hedge fund manager in the world. 


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