RDR will drive investors to 'star' fund managers

Almost half of financial advisers expect the RDR to result in more capital being allocated to ‘star’ fund managers, but its effect on other areas of product selection will be more muted, new research suggests.

The study by Ignis Asset Management, based on more than 450 responses, suggests 47% of investment advisers believe the RDR will encourage IFAs to focus more heavily on well-established, high-profile managers.

However, despite the huge upheaval caused by the regulatory changes coming in at the end of 2012, about 49% believe the RDR will make no difference to their approach.

Only a tiny minority (4%) believe the RDR, due to come into force in 2013, will prompt advisers to focus less on high profile managers.

Just over 40% of advisers surveyed say the RDR will result in IFAs investing more in funds with longer-term performance objectives but again over half (53%) say there will be no effect when it comes to their investment horizon.

Advisers also believe the RDR will not have as great an effect as expected on how they judge fees and performance. Although just over a third of advisers (34%) say they will scrutinise fund charges more closely following the RDR, almost two-thirds (66%) say it will make no difference to their approach in this area.

Rob Page, marketing director, Ignis Asset Management, says: “Whether or not it was intended to do so, it seems that the RDR will cause a significant shift of capital towards so-called ‘star’ fund managers as many advisers focus their attention on the better-known names with proven long-term track records.

"It also seems set to increase the focus on funds with longer term investment horizons – but it will not, surprisingly, have a bearing on most advisers’ attitude towards charges.

“The expectation that management fees would come under pressure post-RDR seems to contra­dict conventional thinking. It suggests that the majority of advisers will continue to value track records and reputation above all else.”