Zurich-headquartered asset management group GAM has become the latest investment house to announce it will absorb research costs onto its own balance sheet when MiFID II rules come into force in early January.
The second iteration of the EU’s Markets in Financial Instruments Directive requires financial service providers to disclose their research and analysis costs to clients and to decide how these costs are to be covered.
The new rules are expected to bring an end to the opaque practice of investment banks providing research for free in return for fund houses placing trades with them.
In a third quarter interim management statement, Switzerland’s largest listed fund house said that the decision “underlines GAM’s commitment to placing clients’ interests first while ensuring sustainable growth for all stakeholders.”
The firm estimates that the research costs will be in the mid-single-digit millions of Swiss francs a year.
It also reported that its assets under management rose 13% to 148.4 billion Swiss francs (€128.1 billion) in the three months to the end of September and up 23% since the end of December last year.
GAM chief executive Alexander Friedman said that, while he did not expect the pace of inflows over the third quarter to be “consistently maintained”, the company continued to see “healthy client interest” for its products.
“Our focus remains on providing excellent investment performance in differentiated strategies that meet our clients’ needs, disciplined execution of our growth strategy and ensuring we make GAM as efficient as possible,” he said.
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