With only three months to go before RDR places investment companies on a level playing field with open-ended funds as commission becomes a thing of the past, what has been going on behind the scenes in the run up to that Brave New World?
The Association of Investment Companies (AIC) has collated some comments from the wider investment company sector to gauge the industry's readiness.
Ian Sayers, Director General, Association of Investment Companies (AIC) said: "Whilst it would be naïve to expect an immediate transformation, RDR represents the single biggest long-term opportunity the investment company sector has seen. The real challenge is to make sure this opportunity does not go to waste and it's extremely encouraging to see so much work being done in the wider sector in the lead up to RDR.
"For our own part, the AIC's main focus has been stepping up our adviser training - we've trained over 500 advisers this year through our online seminars and adviser seminars across the country. The Adviser Centre of the AIC's website has over 1200 advisers registered and we have plans to relaunch this next year on a new site with even more relevant content. We have also been issuing a series of papers addressing key areas of concern to financial advisers. To date we have covered ongoing charges and gearing disclosures, with liquidity and portfolio holdings to follow."
Neil Donaldson, Chairman of Securities Trust of Scotland said: "With the changing demands of the market place and the advent of RDR, the Board undertook a strategic review at the beginning of 2011 to ensure that Securities Trust is well-positioned for the future. The introduction of our new global equity income mandate on 1 August 2011 was clearly the right decision as performance has been strong and demand has driven the trust to frequently trade at a premium.
"To complete the review, the Board took the decision to simplify the management fee structure in April 2012. We believe a straightforward and competitive fee structure is appealing to shareholders and their advisers. With the expected ongoing charge at below 1% we believe that this positions Securities Trust strongly within its open-ended and closed-end fund peer groups."
Piers Currie, Group Head of Marketing at Aberdeen Asset Management, comments:
"For Aberdeen and our Boards, RDR has already happened. We've tuned up our marketing reporting to Boards and we are already seeing this year strong increases in direct platform flows by the self-directed investors and from discretionary fund managers managing portfolios for IFAs.
"We value good information and are the exclusive sponsor of Morningstar's closed-end fund centre in the UK. We've taken a leaf out of our US closed-end colleagues' book and are now reporting financials twice-yearly in short webinars for each investment trust which are sent to shareholders. We've refreshed our broadcasts across all the award-winning closed-end websites we operate and we work closely with other industry leaders like JPMAM on monthly talk radio shows for the IFA community. We also back many investment media initiatives such as the forthcoming pocket guide for new model advisers."
David Barron, Head of Investment Trusts at J.P. Morgan Asset Management, said: "On the investment trust side, we undertook extensive research among IFAs to produce our Case for Consideration white paper in early 2011, which we believe has become a model for the rest of the industry.
"As RDR implementation approaches, this year we produced a series of Investment Trust Insight papers looking specifically at some of the ‘sticking points' IFAs have regarding investment trusts, including discounts and gearing, liquidity and availability on platforms. We will be doing more work on platform availability over the remainder of this year, but we feel it is important for IFAs to understand that investment trusts are already easily accessible on a very wide variety of platforms. J.P. Morgan Asset Management has also been working with other investment trust managers to increase awareness of the sector as a whole, through initiatives such as the monthly BrightTalk Discussion Panel webcasts aimed at advisers."
James de Sausmarez, Director and Head of Investment Trusts, Henderson Global Investors said: "The advent of RDR at last provides investment trusts with the level playing field with OEICs and unit trusts in the IFA market that we have sought for so long. It is therefore disappointing that the principal fund platform providers have so far been lukewarm in facilitating the inclusion of the full range of investment trusts on their platforms. We have not let that diminish our enthusiasm and we are busy identifying those quality IFAs that are receptive to recommending investment trusts, establishing contact with them and are looking to build a special website for professional investors. We are also building relationships with the smaller wrap platform providers, who already offer a service that includes investment trusts, and preparing for an increase in the number of retail clients who come direct to us.
"Our initial efforts are focussed exclusively on The City of London Investment Trust plc, which is an ideal investment proposition for most clients of IFAs with its predominately UK blue chip portfolio, one of the lowest on-going charges and an unrivalled 46 year track record of annual dividend increases. Once some traction has been achieved we shall introduce other Henderson managed investment trusts."
Ed Morse, Head of Investment Trust Business Development, F&C said: "F&C's investment trust business sees the introduction of the RDR as a significant opportunity for investment trusts to enter a level playing field with open-ended funds when the payment of commissions to advisers is finally consigned to history. F&C has a range of leading trusts that meet the requirements of size, liquidity, transparency and simplicity, together with competitive charging structures and strong governance. There remain challenges in creating a genuine level playing field in terms of equality of access through some of the leading adviser platforms, as well as the need for on-going education on the relative advantages of investment trusts. We continue both to engage with platforms and advisers and to support the work that the AIC has been and is doing to help the investment trust industry prepare for a post RDR world."
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