AMWatch

Morningstar: Billions in assets now re-homed in commission-free funds

Morningstar has pored over the figures for Danish mutual funds in the wake of the ban on commission payments between mutual funds and banks, which took effect on July 1 in Denmark. Som EUR 48 billion in assets have shifted to commission-free funds, the firm reveals.

The distribution of assets into commission free funds after Mifid II

In the past, all investment funds paid commission to banks that sold mutual funds to their customers. That practice was brought to an end by MiFID-2 – or at least it became easier for the end customer to tell who was being paid, and for what.

MiFID-2 forced asset managers to think up new models, and the most common one in Denmark has become one where asset managers create new commission-free funds – that are otherwise hardly distinguishable from the existing funds with distribution commissions to banks. The only difference is that the payment is not included in the fund.

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