UK - A top City fund manager has hit out at press coverage of transaction costs, accusing the media of "whipping a frenzy that they [transactions] are inadequately monitored."
Deutsche Asset Management said that recent column inches insinuated that commissions were too high and portrayed a picture of fund managers as colluding “hand in glove” with stockbrokers.
But the firm admitted that it will be phasing out soft commissions in line with the National Association of Pension Funds’ disclosure code, adding “it is not because we are ashamed but because it lacks transparency.”
Deutsche highlighted figures from the Fund Managers Association showing that commissions constituted only 12% of the total transaction costs of a ‘typical’ portfolio; trade execution took the lion’s share with 63%, and stamp duty 25%.
The firm also called on the Government to abolish stamp duty.
But Deutsche’s stance is at odds with recent research showing that institutional investors could be shelling out three times too much to brokers and investment managers in transaction costs.
The study by HSBC’s Global Investor Services revealed a wide gap between the lowest and highest charges levied by brokers and managers.
The survey covered 700,000 transactions worth more than £125bn. Overall, transaction costs averaged almost £500m. Clients then faced stamp duty on all purchases, worth a further £250m.
By Madhu Kalia
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