Economy

Fidelity to introduce performance-based fund charges

Fidelity to introduce performance-based fund charges”

The company said the annual management charge will be cut across all its funds, while performance fees will be introduced but will be "refunded" if, in future, the funds deliver performance that is the same, or worse, than the returns achieved by the benchmark.

The group said its "baseline" management fee, levied when its funds perform in line with the benchmark, would be lower than its current charges.

Any rise or fall would come irrespective of whether the fund posts a gain or loss in the period charged, global CIO for equities Dominic Rossi told reporters this morning.

Fidelity now plans to introduce the new charging structure on the first funds in Q1 2018 before rolling it out further.

Asset manager Fidelity International said on Tuesday it will set a new pricing model for its active equity funds that will charge investors lower management fees if a fund underperforms or simply tracks its benchmark. We will move away from a flat fee model and get paid according to how well we do for our clients.

Fidelity's proposed fulcrum fee equity charging structure.

Brian Conroy, president at Fidelity International said: "Where we deliver outperformance we will share in the upside and where we deliver benchmark performance or less clients will pay less than they now do". The exact level of fees, as well as the floor and ceiling, would be agreed with fund boards, distributors and regulators in the next few months, he said.

He added: "These changes will more closely align the performance of our business with the performance of our clients' portfolios and deliver what we believe clients and regulators are looking for".

"Fidelity's approach is fairly unique and original, differing from that of many of their peers who have chosen to absorb research costs within their businesses", said Adrian Lowcock, investment director at Architas. However, the group insisted this would be more than compensated by the other fee changes.

Fidelity will also reduce its annual management charge (AMC) as it announces clients will pay for research under Mifid II regulation coming in on 3 January.

Conroy said: "Having looked at the implications of upcoming regulation, as well as taking into account feedback from the United Kingdom regulator in its recent market study on the lack of pricing innovation in our industry, we believe that a far more fundamental change to how clients are charged needs to be instituted".



Like this

loading...
loading...

Latest


03 October 2017
United States & #39;d E alleged dominant in the Russian consulate building
Congress due to Russia's alleged meddling in last year's U.S. presidential election and aggression towards its neighbors. We reserve the right to respond". "Reciprocity has always been a fundamental principle in diplomacy".

03 October 2017
STX Deputy Police Chief saves Las Vegas shooting victims
While he did not get directly hit by bullets, he did get hurt. "I'm laying there, the round comes down and I heard it". In a brief post, the chief said, "I am ok too". "I took his belt off of him and put a tourniquet on his right leg".

03 October 2017
Is Gaming and Leisure Properties, Inc. (GLPI) Finding Support or Hitting Resistance?
Hbk Invs LP reported 0.12% stake. 93,732 are owned by Stephens Ar. 10,000 shares were bought by SCHWARTZ BARRY F , worth $364,400. Deutsche State Bank Ag holds 0.09% of its portfolio in Gaming and Leisure Properties Inc (NASDAQ:GLPI) for 3.25 million shares.

03 October 2017
Amber Alert canceled, Colorado Springs man, 3-year-old son found
David Lake and son William were found, and the boy is safe, police said in a tweet shortly after 9 p.m. The vehicle police are looking for has the license plate OPB131 and is a blue 2003 Toyota Carolla.

03 October 2017
Watch Miley Cyrus and Adam Sandler's attractive rendition of 'No Freedom'
She also performed her own solo tribute, singing old song The Climb for the first time in around six years. #TheClimb. She later took to Twitter to share an image of their duet, and wrote in the caption, "No Love without Freedom.

03 October 2017
Reviewing the Insider Trends for Alibaba Group Holding Limited (BABA)
State Of New Jersey Common Pension Fund D holds 0.19% of its portfolio in SeaWorld Entertainment Inc (NYSE:SEAS) for 2.80M shares. With 1.59 million avg volume, 11 days are for Zions Bancorporation (NASDAQ:ZION)'s short sellers to cover ZION's short positions.

03 October 2017
'First Wives Club' comedy series in the works at Paramount Network
It will follow a group of women who band together after their marriages fall apart, and who find strength in their sisterhood. Paramount Network (currently Spike) is developing the program after a failed adaptation attempt on TV Land.

03 October 2017
Ford Creates "Team Edison" To Focus Solely On Pure Electric Cars
The new team also has a new boss - Ted Cannis, who took the new role of global director of electrification. Marakby said Team Edison "will look holistically at the electric vehicle market".

03 October 2017
Mitchell Starc, Josh Hazlewood on track for Ashes comeback
With the Australian cricket team getting battered in India, all eyes will be on the Ashes team selection. Rohit Sharma hammered a 14th ODI century as India wrapped up a 4-1 series win over Australia in Nagpur.

03 October 2017
Colts GM: Andrew Luck will slowly work way into practice this week
Brissett will make his fourth consecutive start Sunday when the Colts host the San Francisco 49ers in Lucas Oil Stadium. We'll slowly start working him back into practice this week .