Fee arbitrage may have distributors pushing alternative investment funds

An AIF typically resulted in an upfront commission of between 3-3.5 per cent of the assets garnered

A change in upfront fee regulations may mean a switch in what distributors pitch to their wealthy clients.
 
Large distributors may look to pitch more alternative investment funds (AIFs) and fewer schemes under the portfolio management service (PMS) scheme, according to experts.
 
Both are essentially sophisticated products aimed at the wealthy though there are significant structural differences.
 
Recent regulatory changes mean PMS schemes have no upfront incentive for distributors.
 
Daniel G M, founder-director at industry-tracker PMS Bazaar, which also tracks AIFs, said distributors had been seeking information about AIFs. Large wealth outfits are examining fee structures