Economics
New Twist in Race to the Bottom for Fund Fees
- New rules next year may push up licensing cost of indexes
- Managers turn to ‘soft-indexing’ and cheaper index providers
Photographer: Andrew Harrer/Bloomberg
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In the race to the bottom for fund fees, Europe’s regulators are about to introduce a new twist.
Starting next month, indexes used in the region, as well as the providers selling them, will be overseen by national regulators. The new rules, introduced in the wake of index manipulation scandals, will add another layer of expenses to an industry already facing pressure to consolidate. For the money managers that use indexes to create cheap passive mutual funds and exchange-traded funds, the change could push up licensing costs and tilt the playing field further in favor of large providers.