You recently cut administration charges on your Lux Sicav range. How important is it to contain costs in today’s environment?
Not only have we reduced charges but they are capped and variable. We did not do this because we had a regulatory or legal obligation, or commercial intent; we did it because we think we have to share the benefit of scale with our clients.
How do these charges compare with those of your competitors?
That is a difficult question to answer because the way these costs are described in prospectuses is often fairly obscure. Remember, here we are talking about administrative expenses as opposed to total expense ratios (TERs). With TERs you also have the asset management fee. Let us say we would like to be at the lower end of the cost range but we are not targeting any competitors. We hope we have a system that is fair, transparent and results in lower costs as assets increase.
Will you have to cut fees further as the pressure to reduce margins increases?
It is a two-tier market. With passives there is a price war, but within active, that is not the case at the moment. What clients look at is performance after fees. Given that we are active managers there is plenty of competition in the marketplace. There is also an understanding that alpha is a scarce commodity and it has to be paid for.
What have you achieved since your election to the board of European Fund and Asset Management Association in May?
I am an active participant and my view is that one has to work as a head of the industry and not the head of a company. If the fund industry does well, so will JP Morgan Asset Management. For EFAMA it is important to make sure that whatever we say to policymakers and regulators we seek to contribute to a stronger fund industry, which delivers a better service to our clients.
The management of EFAMA is doing an excellent job. When it comes to dealing with policymakers and regulators, EFAMA represents all the European countries.
In Brussels, they would not be interested in hearing the voice of a narrow constituency because it would see it as a lobbyist as opposed to a trade organisation, which is what we are.
What is your view on a potential year-long delay to the implementation of Mifid II?
Changing that deadline, which is an integral part of the directive, requires a vote from the European Parliament. It is not something that can be changed lightly by ticking a box at some regulatory authority.
That said, our message has always been that we are working to be prepared for the 17 January deadline. We have an obligation towards our clients, our shareholders, our regulators to be ready and if a delay comes, so be it.
When it comes to these types of matters, we are a big firm. Our Mifid project team is made of tens of highly qualified people. We can typically put up with a lot of regulatory pressure, a lot of tight deadlines. The problem is more for the smaller asset managers, where the cost of complying with these types of rules under tight deadlines might be prohibitive.
Which European markets are you prioritising right now?
It sounds like a non-answer but we see a lot of growth opportunities everywhere in Europe and we do not have any favourites. As a region, Europe is very important.
We have got more people in the UK, Italy, and Germany which are big funds markets, than in smaller countries such as Austria.
If a market is retail focused, like the UK where you have the IFA community, it requires more people because you need client advisers to go and talk to them. If it is a more wholesale market, with a small number of highly centralised decision makers, then you need fewer.