Denmark’s IFR counters criticism of intermediation costs
The Federation of Danish Investment Associations (InvesteringsForeningsRådet), has countered criticism of the costs of intermediation put forward by The Danish Consumer Council (Forbrugerrådet).
The Council published its criticism via financial publication Børsen, claiming that private investors were losing some DKK4bn (€536m) annually because of prices being pushed up by costs associated with fees paid to intermediaries.
The Federation said that the Council had ignored significant facts about intermediaries and intermediated sales of financial products and services, which showed the value added to investors from their use.
Just distribution itself necessitated a certain cost – for investors to access Danish Investment Associations. Any fees for this distribution would make up part of the total costs to investors.
Fees to intermediaries were also required to access financial advice. A number of international studies have shown the value that advice generates for investors, including the higher return compared to that obtained by those who invested without advice, the Federation said.
In the Danish context, there is also data to suggest that Investment Associations stand up well against collective investment products that are available in other markets. Fund data provider Morningstar wrote in a report in 2011 that the typical Danish fund is generally cheaper than the typical European fund, regardless of whether it is an equity fund, bond fund or balanced fund, the Federation added.
And the Investment Associations are among the most transparent on the market, including access to information on costs, the Federation said.
Managing director Jens Jørgen Holm Møller (pictured) said that the claim by the Consumer Council that Danish private investors are being forced to over-pay DKK4bn annually was surprising given the evidence of Danish funds being able to offer higher returns at lower cost than the European average.