News - Investment
Categories: Investment
Topics: Fidelity | Fidelity fundsnetwork
The asset management industry must create an industry standard to bring greater transparency to investment charges, Fidelity Worldwide Investment said today.
Investors should be able to see the total cost of owning a fund - including fund, distribution and stock dealing costs as well as platform administration charges - and compare different products, it said.
Gary Shaughnessy (pictured), Fidelity's UK managing director, said: "[We urge] all areas of the asset management industry to work together to make it easier for investors to see the total cost of investment.
"We believe that the charging structure on funds should be simple, easy to understand and not discriminate against smaller investors."
Analysis of the most popular UK funds available through FundsNetwork, Fidelity's investment supermarket, suggests that, outside the initial cost of investing in a fund in the first instance, the average total cost of owning a typical actively-managed £10,000 investment is £16.67 per month or £200 (around 2%) a year.
Shaughnessy said: "We are seeing selective and partial ‘Ryanair' pricing start to emerge which runs the risk of misleading investors about the real costs they are paying.
"A consistent way of showing charges is essential to restoring investors' trust in the industry and encouraging them to feel confident to save for the future.
"What will really help investors is a transparent and standardised cost breakdown in pounds and pence."
| Charge | Typical amount for an actively-managed fund, expressed in % and £ for £10,000 investment | Typical amount for a low-cost active fund, expressed in % and £ for £10,000 investment | Typical amount for an index tracker fund, expressed in % and £ for £10,000 investment |
| Investment management charge | 0.75% (£75 a year or £6.25 a month) retained by fund manager | 0.40% (£40 a year or £3.33 a month) | 0.1% (£10 a year or 83p a month) |
| Other service and administration charges (eg legal and custody) | 0.14% (£14 a year or £1.17 a month) passed on to service providers | 0.2% (£20 a year or £1.67 a month) | 0.2% (£20 a year or £1.67 a month) |
| Cost of advice or distribution | 0.5% (£50 a year or £4.17 a month) | 0.5% (£50 a year or £4.17 a month) | Nil (for Moneybuilder UK Index but advice or distribution charges may apply in other cases and are often excluded from illustrations) |
| Platform administration charge | 0.25% (£25 a year or £2.08 a month) | 0.10% (£10 a year or 83p a month) | Nil (for Moneybuilder UK Index but platform charges may apply in other cases and are often excluded from illustrations) |
| Stock Market dealing costs and Government stamp duty | 0.36% (£36 a year or £3 a month) | 0.25% (£25 a year or £2.08 a month) | 0.09% (£9 a year or 75p a month) |
| TOTAL ANNUAL COST OF OWNING A FUND (based on investment of £10,000) | 2.00% (£200 per year or £16.67 a month) | 1.45% (£145 a year or £12.08 a month) | 0.39% (£39 a year or £3.25 a month) |
Categories: Investment
Topics: Fidelity | Fidelity fundsnetwork
Comments
what's new?
Fidelity are clinging to the past. They lost the fund debate/unbundling argument - time to move on and stop whining.
The only new thing above is dealing charges. That argument has been comprehensively trashed by the IMA.
Finally, we already have an excellent disclosure method called Reduction in Yield which also includes initial charges - why reinvent the wheel with something worse?
Posted by: Stanley Kirk
30 Jan 2012 | 16:08
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In specie transfers
While Fidelity are talking about other peoples less than transparent charges, which I agree are misleading, they might like to address their policy of preventing in specie transfers from their Network of anything other than their own unit trusts.
For taxed portfolios this could result in a client having to pay a significant amount of unneccessary Capital Gains Tax and effectively makes it impractical for many clients to switch from Fidelity Funds Network.
One might argue that this policy is, as they describe it, another Ryanair slight of hand!!
Posted by: Alan Beaney
30 Jan 2012 | 14:36
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