Standard & Poor's Fund Research is increasing its charges for rating funds. Some in the industry ar...
Standard & Poor's Fund Research is increasing its charges for rating funds.
Some in the industry are questioning whether there is a conflict of interest in a system that levies its charges to fund management groups based on the number of funds it assesses.
During 2000, 900 funds in the UK sector will be eligible for ratings, up from 750 in 1999. The additions account for the inclusion of ratings on the UK index trackers and a dedicated high yield review.
Christopher Butterwick, UK sales director at Standard & Poor's Fund Research, said fund management groups have this year been charged a flat fee of £15,000 each, plus £4,000 per fund that passes the quantitative assessment process and is to be assessed for an fr rating.
Prior to this year, the charging structure was less consistent. Although Butterwick could not define how this affected different groups, some fund management groups have reported that their fees have as much as doubled this year.
The groups said fees have risen to such an extent that they are forced to consider putting up only certain funds for review.
Simon Ellis, sales director at Henderson Investors, said he would consider only paying to have the main five or six funds that he plans to market over the next year assessed for ratings, of a possible 30 which may qualify. Other fund management groups have echoed this sentiment.
Butterwick said this cherry picking would not be allowed.
"We will never allow management groups to cherry pick - it is not in the interests of the management groups and it is certainly not in the interest of the IFA."
Justin Modray, an IFA at Chase de Vere said although he believes S&P Fund Research offers a valuable service, the ongoing fee increase is a concern.
Chase de Vere currently only sells funds that have achieved S&P fr ratings, using this as its first filter for selecting funds. Modray could not rule out reassessing this process in the future.
Partner Insight Video: Advisers have had to adapt to the changing investment landscape.
Investment trust savings scheme