New regulation which has already been implemented in the UK as of 2012, the Retail Distribution Review (RDR), may cause far reaching changes in South Africa’s collective investment scheme industry. The RDR regulation being discussed recommends a change in the way fees are charged for collective investment schemes. It is proposed that purchasers pay fees to brokers and investment advisers, rather than the fund managers themselves.
The regulation may fundamentally change the industry. Passive investment schemes may see larger flows of new business and active managers may be pressured to improve their performance in order to warrant the fees which they charge. The changes may be good for the individual investors and for the industry as a whole, though asset managers may not welcome the new regulation.