Fidelity Int’l extends variable fee to UK Oeics

Fidelity International has extended its variable fee model – which gives money back to investors in periods of underperformance – to five active equity products in its UK fund range.

New share classes for the open-ended investment companies have a 0.10% lower base annual management charge (AMC), meaning investors will pay 0.65%. Part of the fee is variable and slides up or down within a maximum range depending on three-year performance, after all fees and charges.

The funds covered are Fidelity Special Situations, Fidelity European, Fidelity Asian Dividend, Fidelity Global Special Situations and Fidelity American funds.

This scale goes between +0.2% and -0.2% above or below the AMC, meaning the maximum and minimum fee levied would be 0.85% and 0.45%, respectively.

Fidelity unveiled details of its fee structure in November last year as a response to criticism of fees in active management.

Paras Anand, chief investment officer for equities, Europe, at Fidelity, said:  “We have listened and responded to the growing debate around the value of active fund management. Clients can now access our new variable management fee in some of our flagship funds, and over time, we plan to expand this offering to our broader fund range.”

The new fee structure has already been applied across five active equity funds in Fidelity’s Luxembourg Fidelity Funds range and the firm says that in addition, over £2 billion of assets in Fidelity’s investment trust range will move to the variable fee by August 1 this year.

The largest of these is the Fidelity China Special Situations PLC, with £1.65 billion of assets.

JP Morgan Asset Management is another fund manager that in recent years has brought innovation to its fee structure. In 2015 it switched the operational and administrative costs for a portion of its Luxembourg Sicav with $9 billion of assets under management from a fixed cost, to a capped, variable cost.

©2018 funds europe

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