New EU fund disclosure regulations have caused quite a stir in the fund world.
Since 3 January, a new EU regulation called MIFID II requires investment managers to disclose additional transaction costs that are charged to their funds, separately from the ongoing charges figure.
The directive also requires IFAs to report all the costs back to their clients.
We have consistently maintained that the costs of dealing, ie portfolio turnover, were an obvious hidden factor.
Hence on the Arcturus Focus List of funds the majority have low, and in some cases, very low turnover. We are paying managers to take a decision, then have the courage to see the idea play out over an extended period.
Higher than average turnover is a tell-tale sign of a lack of conviction, or even worse of a manager trying to play the 'momentum game'.