UK - Gartmore Investment Management has produced a booklet to answer the 10 questions that its former boss - Paul Myners who headed up the Treasury's review of institutional investment - said pension funds should pose their investment managers.
On the subject of soft commission, Gartmore said it is phasing out its use of such arrangements for UK segregated pension funds, but notes of the “accepted regulated activity”:
“It has been traditional in the UK and in the US to employ soft commission on behalf of clients to obtain research and services directly related to investment decision making. This is carried out within SEC Safe Harbor 28(e) rules in the US and FSA rules in the UK. “
Regarding transaction costs, Gartmore said the biggest transaction cost in the UK is stamp duty at 0.5% on every purchase of UK equities.
“Where clients specifically agree, this cost can be eliminated by instead using Contract for Differences (CFDs) which do not incur stamp duty. However, CFDs are still only used for a minority of clients. More generally we have been proactive in negotiating reductions with brokers in commission rates.”
By Luke Clancy
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