How clean fee active funds are fighting back against trackers

The RDR-induced switch to ‘clean' share classes could help active funds fight back against the shift towards passives, according to new research from wealth manager Equilibrium.

Regulations from the FSA will ban commission to advisers, leading to a proliferation of new share classes from fund groups. These low-cost retail share classes typically have an AMC of 0.75%, down from an historic 1.5%, leaving them on an equal footing with institutional share classes. Research from Equilibrium has found the use of these low cost share classes is helping many sectors outperform index funds over the long term. Equilibrium’s investment manager Mike Deverell, who carried out the study alongside the group’s investment analyst Graeme Black, said the lower cost active fu...