Interactive Investor is calling for rules similar to those in the US where investors are compelled to reveal whether they invest in their own funds.
Nine out of ten investors want to know if investment managers have put their money where their mouth is by investing in their own funds. That’s the finding of a new survey from direct to consumer investment platform, Interactive Investor.
The investment platform has now written to leading financial watchdogs – the FCA and the Financial Services Consumer Panel – calling for similar rules to those already in place in the USA which compel fund managers to say how much they have invested in their funds.
These new ‘skin in the game’ rules would, they say, bring much more transparency into the market and boost consumer confidence.
According to III’s survey of its website visitors, 88% said it should be mandatory for fund managers to disclose whether they invest in their own funds. 77% said they would be more likely to invest in a fund or investment trust if the manager is personally invested in it. Of those, 23% said they had no idea how to find this information out.
“We believe this transparency gap needs to be addressed by the FCA for the benefit of investors in the UK to ensure they can make better-informed decisions.
“Retail investors deserve better disclosure and treatment – it is just good governance. They should be given the critical information required to decide if those who eat their own cooking are indeed better cooks.”
Money where their mouth is
In the US, the SEC already requires fund managers to be clear about how much they invest in their own funds. Under SEC rules, managers must disclose amounts by bands, rather than precise amounts. This information is enough, the regulator believes, to help investors understand how closely the manager’s own interests align with their clients.
The same does not apply in the UK. If you’re interested in this issue, you currently have to rely on the good will of your fund manager about how transparent he or she chooses to be.
Moira O’Neill, Head of Personal Finance, interactive investor, added:
“Who wouldn’t want to know whether their fund manager eats their own cooking? The answer is not many, and our research backs this up loud and clear. It is generally only journalists or investment analysts who are in the privileged position to ask these difficult but important questions.”
Tom Cropper has been writing for us since 2015. Tom is a financial journalist and his work has appeared in titles such as the Guardian, Euromoney and many others.