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A Statement of Value

The Financial Conduct Authority (FCA) introduced new rules on 30th September 2019, designed to strengthen the duty of asset managers to act in investors’ best interests. These require an authorised fund manager (AFM) to carry out an annual assessment of whether the fund(s) they manage provide value to their investors (known as an assessment of value or AoV).

The FCA has detailed 7 criteria on which AFMs should assess value – as listed below – but this is seen as a minimum by the regulator:

  1. Quality of service
  2. Performance
  3. AFM costs – general
  4. Economies of scale
  5. Comparable market rates
  6. Comparable services
  7. Classes of units

Although it is early days, we have seen considerable variety in how the assessments have been presented.  This is not that surprising given that the FCA was not particularly prescriptive in terms of how the AoV is delivered. For example, we have seen a number of AFMs simply include (some might say bury) them within their annual reports, whilst others have chosen to produce specific reports for this purpose.  With this in mind, it is not surprising that we have also seen considerable differences in terms of the quality that has been delivered so far.  A reasonably good example was produced by Vanguard, please see the link below:

https://www.vanguard.co.uk/documents/adv/legal/assessment-of-value-uk-en.pdf

We will see more and more reports being released over the coming weeks and months and hopefully the quality will improve with time and perhaps we can also hope for a more standardised output.  This is certainly something that would assist financial advisers and others involved in fund research and recommendations.