Fund managers could be forced to invest in their own funds if a European rule proposal gets the green light.
Proposed Ucits V fund rules dictate that managers should receive “at least 50 per cent” of any bonuses or variable pay in the form of shares in the products they manage.
The rules would affect the majority of retail funds in the UK when they come into force in 2015.
German Green party MEP Sven Giegold, who is leading the Ucits V debate in the European Economic and Monetary Affairs committee, told Investment Adviser the requirement was being designed to “better align the interests of the manager with the owner of the fund”.
“It is a general investor protection requirement,” Mr Giegold said. “We are not here to make the fund managers happy but to align these interests.”
Mr Giegold has also made a bid to ban performance fees in Ucits funds as they are “asymmetrical” and make fund charges difficult to compare.
Irving Henry, prudential specialist at the IMA, said the trade body “supported the alignment of fund manager and investor interests”, adding that most fund managers were already preparing themselves for the new rules.
Many fund management firms in the UK already encourage managers to put money into their own funds. Artemis managers invest solely in funds run by themselves and their colleagues, while Liontrust Asset Management’s fund managers are also all invested in their own products. Ignis bond manager Chris Bowie revealed last year that he was the largest non-institutional investor in his Absolute Return Credit fund.
