Money Markets revealed as most inexpensive IA sector for investors throughout 2018

Since January 2018 FundsLibrary’s MiFID II Manager has received, reviewed and analysed European MiFID Templates (“EMTs”) for almost 30,000 share classes. We are therefore uniquely placed to provide our clients with valuable insight into how their products compare to their peers and to the wider market in general.

We have recently completed MiFID II cost analysis reporting for our clients and have come across some very interesting insights into the various sectors and their respective charges, some of which are highlighted below:

The cheapest IA sector by median Super Ongoing Charges Figure (“OCF”) was the Money Market IA Sector, where the charge was just 0.18% on an ex-post basis. This was followed closely by Short Term Money Markets (0.2%), UK Gilts (0.26%) and UK Index Linked Gilts (0.31%). At the other end of the scale, the most expensive IA sector was Technology & Telecommunications, with a median Super OCF of 1.83% on an ex-post basis. Japanese Smaller Companies (1.7%) and China/Greater China (1.63%) were second and third most expensive respectively, demonstrating that the middle ground for charges was far higher for equity funds than for those investing in fixed income assets.

IA Sector Super Ongoing Charges Figures

Chart Showing Different Scales of IA Sector Super OCFs

Since the beginning of 2019, we have been working with our Asset Manager clients to add ex-post EMT data to our platform. This has allowed us to perform some variance analysis between the ex-ante and ex-post figures across the industry. A negative variance indicates that the ex-post figure is lower than the ex-ante figure. This has yielded some interesting results, for example, 33% of share classes show a variance of zero, meaning that an investment today is predicted to cost the same over the next year as it would have done had you been invested throughout the past year.

The variance between the two reporting periods (ex-ante and ex-post) led to a shift at the more expensive end of the IA Sector cost analysis, with Technology & Telecommunications moving off the top spot and down four places at 1.63% on an ex-ante basis, indicating a much lower middle ground for charges in this sector for new investment. Japanese Smaller Companies was reported as the most expensive IA Sector, with a median Super OCF of 1.8%. This indicates that new investment will be 0.1% higher in cost today than it would have been a year ago.

As mentioned previously, we make this information available to our clients on a regular basis.  If this is a service that you would be interested in receiving please contact a member of our Data Services team on +44 117 980 9994 or by email.

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All figures correct as at 30.06.2019.