Saturday, Feb 4, 2023
International Finance
Wealth Management

Barings to absorb external research costs resulting from MiFID II implementation

It has made significant investments in expanding its in-house research capabilities, thereby reducing third-party research costs

Barings, one of the world’s leading asset management firms with over $288 billion in assets under management, has announced that it will absorb external investment research costs when the latest expansion of the Markets in Financial Instruments Directive (MiFID) is implemented. This encompasses all of the firm’s global equity, multi-asset and fixed-income portfolios impacted by MiFID II, scheduled to take effect on January 3, 2018.

MiFID was developed by the European Union to improve the functioning of financial markets in the wake of the 2007-2008 global financial crisis. MiFID II represents an expansion of the original MiFID legislation and impacts a wide range of areas in asset management.

Specific to investment research costs, MiFID II will require asset management firms that operate in the European Union to unbundle the costs of external research from trading execution costs, which had been the industry standard. After MiFID II is implemented, firms will either need to pass those research costs onto their clients or absorb them directly.

“Fundamental research is the foundation of successful active management, and over the past several years Barings has made significant investments in expanding its own comprehensive in-house research capabilities, thereby reducing our third-party research costs,” said Ghadir Abu Leil-Cooper, Global Head of Equities.

“While we will continue to utilise select external research where it benefits our clients, the decision to absorb those costs is a logical step in strengthening our partnerships with our clients.”

Tom Finke, Barings Chairman and Chief Executive Officer, added, “Barings possesses exceptional breadth and depth of investment research talent, which serves as the underpinning of a robust global investment platform designed to serve our clients’ needs. Our decision to absorb the costs for third-party research reflects our overarching goal of advancing partnership and putting our clients’ interests first.”

During the past several years, Barings has made additional investments to expand its equity, multi-asset and fixed-income research platforms, and it plans to continue expanding its proprietary research capabilities in the coming years in response to client needs.

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