Active costs pushed up by distribution, MoneyFarm chief says

Active costs pushed up by distribution, MoneyFarm chief says

Active funds are more expensive because of the cost of distribution, the chief executive of robo-adviser MoneyFarm has said.

Giovanni Daprà was speaking after it had been announced that fund house and insurer Allianz has bought a minority stake in his company.

He said this would allow it to expand in the UK and across Europe, and the two companies would be working on distribution of active funds through automated advice.

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Mr Daprà said: “I don’t think it has to be the case that active funds are so expensive.

“Cost is a big issue today in how people react to any fund. Their cost is not so much because of the active manager’s charge but because the distribution is so expensive, particularly in continental Europe.

“This is a shame because distribution itself doesn’t add much value.

“It is important to look at costs but at the same time it is important to look at value, and what you are getting when you pay for something.”

MoneyFarm was launched in Italy in 2012 and came to the UK earlier this year.

It offers six portfolios, with clients recommended an option after working through a questionnaire to establish their attitude to risk.

Mr Daprà said he and Allianz were still in discussions over the exact form of the active proposition, such as whether it would be an equity fund or a bond fund, but he said it would be launched in the first quarter of 2017.

He also said the proposition could be distributed through a vehicle completely separate to MoneyFarm.