Failing the Assessment of Value is still a good result

Keeping you abreast of the latest asset manager lingo, the word ‘premiumisation’ is one to listen for. The Lens was on the road at the very beginning of the year to chart China’s economic rise (we are fine, thank you for asking) and it was there where we heard the term.

You might be aware that the FCA’s ‘Assessment of Value’ regime is now in force. This latest initiative, which is concerned with investment fund governance, has already had an effect that will be of great pleasure to the regulator.

Assessment of Value is expected to see independent non-executive directors parachuted down in greater numbers onto UK fund boards in a bid to counterbalance the influence of asset management corporate directors that dominate these boards.

Aviva Investors appointed two independent directors to its UK fund range in the weeks preceding the Assessment of Value regime.

But as well as emphasising the role of ‘iNEDS’, the new regime is mainly about whether a fund is considered to provide value to the end-investor, based on criteria like if economies of scale are being shared, whether performance is doing what it ought to, and whether the fee is right.

Aviva Investors became one of the first to publish its Assessment of Value report – and a key result of the exercise was that five investment funds will see their fees lowered by several percentage points.

The Lens has read the Assessment of Value reports, which are tagged on to the company’s wider annual reporting for UK funds. Reasons for the reduction are not particularly elaborated on and the impact of the iNEDS, if any, is not known.

However, the regulator will be pleased with the outcome – but so should Aviva Investors be, too. The firm has not only set something of a bar for others; it might also see higher inflows as a result of the price change. Even if all that it gets out of this is a bit of a good press over higher standards of fund governance, there is still no reason for Aviva Investors not to celebrate.