More work needed on multi-asset benchmarks – AJ Bell

Kevin Doran
6 February 2019

The FCA has today issued a policy statement outlining further remedies to come out of its Asset Management Market Study.

Kevin Doran, chief investment officer at AJ Bell, comments:

“The proposals to deliver greater clarity around fund objectives and performance against benchmarks is a positive move as it should help investors when doing their fund research.  In fact we’d like to see the FCA go further and look at introducing similar guidance for managed portfolio services because consistency of terminology in this area is worse than it is in the funds world. 

“More and more advisers are using managed portfolios services and we believe the objectives, performance reporting and risk disclosures should be harmonised with the standards applicable to funds.

“The specific directive to ensure funds have a suitable benchmark is welcome, but it will require more effort from the industry to create a viable solution for multi-asset and outcome-orientated products. As a member of the multi-asset fund community, we’re working closely with the industry and risk profiling tool providers in particular, to address this issue.

“For those groups running funds with tracking error constraints, the FCA’s call for the degree of benchmark divergence to be disclosed will represent a wake-up call.  For far too long, customers have been faced with a plethora of products offering passive performance at active prices.  As believers in the merits of both passive and active investment, the opportunity to identify those offering lip service to active management is something we support.”

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