Guillaume Prache’s key focus as Managing Director of BETTER FINANCE has been to campaign against fund managers charging fees in line with active management, while, in reality, mimicking low-cost passive strategies, often called closet indexing. Prache said that “in today’s low-return environment, the high fees of falsely active funds show up more vividly. Since the financial crisis we have talked a lot about investor protection being a priority, but when you look at the facts, this has not so much been the case.”
Albin Rannar, head of market surveillance at the Swedish Shareholders’ Association, one of BETTER FINANCE’s members, which has regularly urged its national regulator to step up its efforts to confront the issue, said: “Guillaume is really at the forefront on the case of falsely active management, pressuring the European Securities and Markets Authority to release the names of closet trackers.”
Indeed in October 2014, Prache wrote a letter to ESMA chairman Steven Maijoor urging him to instigate an EU-wide investigation on closet indexing for “not giving consumers the active management that they pay for”.
“Investors still don’t know which are the culprits, which are the falsely active funds and so the abuse and the prejudice continue to grow without investors being properly informed of which funds they should at least avoid. That’s a big failure in individual investor protection in the EU” declared Prache.
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