2021 Grand National: Why horses for courses applies to the investment world
With a history dating back more than 180 years, the Grand National is undoubtedly one of the biggest...
Analysis by FundCalibre shows that fees for actively managed equity funds have fallen by more than 15% over the past four years*.
Looking back at ongoing charges figures (OCFs) in 2017 – as far back as the data allows – the average annual charge for actively managed equity funds has fallen by more than 15% from 1.13% to 0.95%*. What’s more, the average annual cost of a newly launched equity fund is now just 0.85%*.
Commenting on the findings, Darius McDermott, managing director of FundCalibre, said: “We’re really pleased to see that the UK fund industry has reacted to the passive threat by cutting fees. The annual costs for investors are now substantially lower than they were even four years ago.
“Recent fee cuts from Baillie Gifford, Matthews Asia, Nomura and M&G are just a few examples of where active managers are now putting pressure on passives.
“More and more managers are now passing on economies of scale to investors. Importantly, they are doing so on some of their most popular and best performing funds.”
Some 70% of FundCalibre’s Elite Rated and Radar equity funds have OCF’s below the average 0.95%**.
|Baillie Gifford American||0.51%|
|Baillie Gifford Japanese||0.61%|
|Baillie Gifford Japanese Smaller Companies||0.61%|
|GAM UK Equity Income||0.63%|
|Baillie Gifford Japanese Income Growth||0.63%|
|LF Lindsell Train UK Equity||0.65%|
|M&G Global Dividend||0.66%|
|JOHCM UK Dynamic||0.66%|
|JOHCM UK Equity Income||0.67%|
|M&G Global Listed Infrastructure||0.70%|
“Post the Retail Distribution Review we have seen a constant downward pressure on fees of open-ended investment funds,” continued Darius.
“The huge competition in the UK funds industry is providing great value and choice for the ordinary investor and the options and costs today are incomparable to 25 years ago, when I first started work in the industry. The FCA deserves a lot of credit for fostering this competitive environment.
“There’s still further to go and we believe costs for active management will continue to fall.”
*Source: FE fundinfo, January 2017, 2018, 2019, 2020 and 2021. The data includes IA sector equity funds which qualify for the FundCalibre Fund Management Index
**Source: FE fundinfo, as at 3 March 2021