Miton is going against the herd by attributing research costs to its range of eleven open-ended funds, following the implementation of MiFID II in January.
The group, which has over £3.5bn under management, has begun writing to wealth managers and clients to explain its strategy, which formalises an approach it has been using for the last two years.
During this period, it has had a formal set budget for external research costs, which varies according to a fund's particular strategy.
Going forwards, each fund will continue to have a budget as the group does not want to restrict the use of research purely on a cost basis if they think it adds value to investors.
Miton chief executive David Barron said: "We think having a specific charge attributed to each fund for research costs is part of the wider debate about value for money and it is also more transparent.
‘We have a high active share across all our range of funds and in some strategies, such as European Opps or US Opps, we do not have any of the top ten holdings in the benchmark index so we believe we are delivering investors real value using external research."
Fund manager and executive director Gervais Williams added: "We believes this puts us on the front foot and differentiates us from the competition.
"But it is also part of what we have been doing for the last couple of years to improve the running of the business to the benefit of investors."
He also pointed to a move where Miton contacted its ACDs two years ago to improve foreign exchange transaction terms and passed on the benefits for better execution to investors.
Williams highlighted that one of the benefits of using good quality external research was to ensure fund managers could direct capital to the right companies in the UK which needed it most, thereby helping tackle the country's productivity problems.
Using his closed-ended Diverse Income Trust as an example of what the actual research costs are on the open-ended funds, they are likely to be in the range of 0.1%-0.2% annually.
Miton has an across-the-board AMC of 0.75% on its fund range and this figure will continue to be used next year once the explicit charge for research is approved and adopted.
The group is bucking the trend on research costs post-MiFID II. Earlier this year, groups including Schroders, Janus Henderson and Invesco Perpetual u-turned on original plans to pass on costs, and instead said they would be absorbing fees onto their P&Ls.
Fidelity is one of the only outliers to announce clients will take on the cost of research. However, it said the reduction of its base management fee, as part of a wider shift in its charging structure to a performance-related model, will exceed and offset the allocated client charges for research.
Last week, boutique manager GVQ, which applies private equity techniques to the quoted market, became the latest group to announce it would be absorbing research costs.
CEO Jamie Seaton, said: "GVQ was set up and has always operated as a proprietary research-led investment house. The six-strong investment team is supported by a proprietary panel network of five industry advisors with plc board, operating and M&A experience.
"Given our extensive research infrastructure, our use of third party research is highly selective. There will be no change to our modus operandi as a result of MiFID II, and we can confirm that from next year, we will be covering any cost of external research ourselves."
Meanwhile, the Financial Times has reported that the FCA has alarmed some City brokers by saying MiFID II research rules could extend to wider sales and trading roles.
For example, they would encompass content produced by sales traders who take orders on trades and typically advise clients by highlighting trends and "market colour".
In an environment where yields are so low, costs can make a huge difference to the outcome’
ETF market to hit $7.6trn by 2020
Responsible for fund selection
Closing in 2020
Focused on asset liquidity and credit quality