Update: Baillie Gifford adjusts fees on £200m Shin Nippon trust

'Taking the initiative on transparency'

Natalie Kenway
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Update: Baillie Gifford adjusts fees on £200m Shin Nippon trust

Baillie Gifford has amended the investment management fees on the £203m Shin Nippon investment trust, after previously announcing the reduction of fees on two of its other closed-ended products.

The Edinburgh-based firm has announced it will be introducing a new layer to the tiered fee structure of the £422m Baillie Gifford Japan trust and £271.8m Edinburgh Worldwide investment trust based on their net assets.

Boards on both trusts have agreed an annual management fee of 0.95% on the first £50m of net assets and 0.65% on net assets above £50m, with an additional tier of 0.55% introduced on net assets above £250m. Fees will continue to be calculated and levied at the end of each quarter. 

Baillie Gifford's Whitley: It baffles me why people still use the pre-computer age, price-weighted Nikkei index in Japan

James Budden (pictured), director of retail marketing and distribution at Baillie Gifford, said: "The investment trust industry has to take the initiative if it wants to compete in the new world of transparency and clarity of costs for investors.

"There is an opportunity for the boards of trusts and managers to work together to grow assets under management and drive down fees for the end investor.

"This move highlights our ongoing commitment to the long-term future of the investment trusts we manage. We already have one of the most attractive fee levels for Scottish Mortgage Investment Trust, the £4bn global investment trust, and by taking advantage of economies of scale there is an attractive opportunity to reduce costs and remain competitive."

Previously the AMC for both the Japan Trust and Edinburgh Worldwide trust was calculated at 0.95% on the first £50m of net assets and 0.65% on the remainder.

This follows a number of moves in the investment trust history as focus on charges in active management spreads from the open-ended sector.

When Neil Woodford launched his Patient Capital investment trust last year, Woodford Investment Management said it would only charge 0.1% to cover the bare minimum of costs, with no other recurring charges, but it would take a performance fee when the fund delivers in excess of 10% per annum (subject to a high watermark), something which it has not returned in its first year.

Additionally, the Baring Emerging Europe Trust scrapped its performance fee earlier this year, while the way the management fee was calculated on the Lindsell Train investment trust was adjusted in March so that the NAV of the investment company is used as a reference.

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