UK - Gartmore Investment Management is urging fund managers to improve the transparency of transaction costs or face possible government legislation
The fund manager believes discussion of the subject has only progressed “fitfully”, since the launch of both the Myners review in March 2001 and the NAPF/Investment Management Association code of practice earlier this year.
Gartmore is also concerned at the looming Treasury review of transaction costs in March 2003.
The firm says that while people have looked at readily identifiable costs – such as commission and stamp duty – issues such as market impact costs and the opportunity costs related to dealing with delays have been neglected.
Gartmore has also urged investors to make transaction cost measurement part of their investment processes.
Gartmore chief operating officer, investment division, Barry Marshall, said: “The issue of transaction costs is not going to disappear and we as an industry must be more proactive in finding common ground and effective solutions.
“We are not saying that Gartmore has all the answers, but we are trying to urge the industry to constructively engage to establish real answers to these real issues.
“The challenge for the industry now is to recognise that these issues are hugely significant and are intrinsically linked to the future structure of our industry.”
But Tilney Investment Management director Peter Bickley questioned whether defining market impact costs was of any benefit.
He said: “Once you go beyond the obvious costs – such as taxes and the fund managers revenues – you are stepping over a line and are making the whole exercise slightly fanciful.
“If you start trying to pin down areas, it will simply inhibit people’s behaviour. Anything that inhibits behaviour is a bad thing, and while you may inhibit some bad behaviour there are other ways of going about things.”
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