FCA Study response: Passive coverage is 'appropriate for size of industry'

Industry experts hit back at FCA's criticism

Fund buyers and ratings providers have hit back at criticism by the Financial Conduct Authority (FCA) that passives are under-represented on buylists, saying investors have plenty of options both in the active and passive space.

In the interim report for its Asset Management Market Study, the regulator criticised platforms for favouring active funds over passives on recommended lists, and also said ratings providers award the highest ratings to active funds, meaning passives could be overlooked by investors. However, industry experts have argued passives are already taking up a large proportion of buylists, having only started to gain prominence in the UK in recent years. Passives now make up 23% of total AUM in the UK, although this is still behind the US where the split is closer to 50/50. Ben Seager-Scott ...