Cost saving on 'clean' share classes bigger for equity funds

Portfolio allocationThe difference in price between conventional and 'clean' share classes, created after the Retail Distribution Review (RDR), is greater for equity funds than bond funds, suggests new research.

Data from research firm Fitz Partners says the total expense ratio for an average “clean” share class of an equity fund is 73 basis points less than a conventional share class. For bond funds, the difference is only 46 basis points on average.

“Stripping distribution fees out of the fee structure as a result of RDR has certainly pushed the overall fund expenses down but it is remarkable that the drop is not even across all asset classes,” says Hugues Gillibert, chief executive of Fitz Partners.

“For some funds the reduction is more than enough to compensate for any external new fees that will be paid directly by an investor, for others that gap will be much tighter.”

Fitz Partners says the research is based on more than 14,000 fee calculations at share class level of cross-border funds.

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