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Fund governance: Columbia Threadneedle board rates manager on value

boardroom_signColumbia Threadneedle Investments has reduced the registrar fee on UK funds so that customers gain more from economies of scale.

The measure comes after the firm became the latest fund manager to publish an Assessment of Value report, which is a new requirement by the Financial Conduct Authority and is intended to increase value for investors through better fund governance.

Columbia Threadneedle’s fund board awarded just two stars out of four (meaning ‘moderate’) for economies of scale – one of the value assessment regime’s criteria for good value. The firm said savings from economies of scale “are not necessarily passed on to customers” in some of its larger funds and share classes, and the reduction in registrar fee is intended to correct this.

Overall, the company’s fund board – which comprises four executive directors from Columbia Threadneedle and two independent non-executive directors – awarded the firm a ‘good value’ assessment.

The factors behind the ‘good’ rating include three stars for authorised fund manager costs (which include administration and custody) and three stars for comparable market costs. The board awarded two-and-a-half stars (just above ‘moderate’) for performance.

The report covers 57 funds and 435 share classes.

Nick Ring, regional chief executive at the firm, said: “I welcome the introduction of value assessment reporting, an important step forward in providing greater transparency across all funds and asset managers in the UK. I believe it will ensure improvements across our industry, including clearer and more specific fund objectives and targets, greater focus on performance after fees and improved transparency regarding costs and charges, all of which enable customers and their advisers to better measure and compare outcomes across funds and asset managers.”

He added that Columbia Threadneedle is taking steps to reduce costs for customers this year, including removing performance fees on the UK fund range, lower annual management charges on 55 share classes, subsidies and fee caps on 32 share classes, and the conversion of around 30,000 direct customers to cheaper share classes.

The reduction of registrar fees - which includes costs for publishing fund reports and maintaining the shareholder register - applies to 26 share classes for some of the firm’s larger funds.

Other firms that have produced Assessment of Value reports include Aviva Investors, which In February said it would lower the fees on five investment funds, both passive and active.

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