Investors in pre-RDR retail classes could be paying 55% more in fees than if they were invested in clean share classes, according to Fitz Partners.
The research firm's UK Fund Charges database revealed Baillie Gifford investors would benefit on average from a 55% discount on their Ongoing Charges Figure (OCF) and 56.5% reduction on management fees from switching from a pre-RDR share class to a clean one.
RDR, which came into force in 2013, is a set of rules aimed at introducing more transparency and fairness in the investment industry.
The Financial Conduct Authority's final fund market remedies, published in April in response to the regulator's Asset Management Market Study, confirmed asset managers will be able to move existing investors from legacy pre-RDR share classes into discounted clean classes and therefore benefit from lower fund fees.
According to Fitz Partners research, the overall average discount on clean classes OCFs, for equity funds domiciled in the UK, stands at 44%.
Turning to management fees, Old Mutual Global Investors delivers the largest drop in fee offering an average discount in clean share classes of 59% compared to pre-RDR share classes.
Joining Baillie Gifford and Old Mutual in the top five fund promoters offering the largest management fee discounts in UK clean share classes, are Franklin Templeton Investments, Schroders and LGIM. Franklin Templeton offers a discount of 55.3%, while Schroders and LGIM offer discounts of 53.1% and 52.6% respectively.
Meanwhile LGIM, Franklin Templeton and BNY Mellon offer OCF savings of 52.7%, 51.6% and 49.1% respectively.
Commenting on the findings, CEO of Fitz Partners Hugues Gillibert said: "On average the discount enjoyed by investors invested into clean classes has been about 44% but as the table below shows, some asset managers have been further discounting their total expenses often by substantially lowering their management fees and keeping other expenses such as administration fees low.
"As Fitz Partners also classifies all share classes for European cross-border funds, we were able to estimate the average level of discount on OCFs for clean classes in Europe as 40%."
Gillibert added the level of rebate is actually slightly lower than what the firm has experienced in the UK, but it expects to see this discount "grow with the steady increase in the number of further discounted clean classes in Europe, so-called 'super-clean' classes".
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