3 Top Rated Investment Trusts with Low Fund Fees

As Baillie Gifford announces plans to cut fees on two of its top investment trusts, we look a the cheapest top-rated closed-end funds available to investors

David Holder 2 September, 2016 | 10:20AM
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History has shown that a fund’s fees are a key predictor of future returns. The lower the fees, the greater the gains returned to the investor – compounded over time this is very compelling for returns. The cost of investing plays an important role within the Morningstar Analyst Rating process, along with the investment process, quality of manager and the culture within a fund house. 

Baillie Gifford Cuts Fees

We were therefore pleased to hear that Baillie Gifford have announced that they are reducing the fees on the Gold Rated Baillie Gifford Japan Trust (BGFD) and the Bronze Rated Edinburgh Worldwide Investment Trust (EWI) on September 1 2016. Both trusts have in place an existing tiered fee structure based on net assets starting at 0.95% on the first £50 million and 0.65% thereafter. The additional kicker is that now Baillie Gifford will charge a reduced fee of 0.55% on net assets over and above £250 million.

We like the concept and message for investors here, that is, as assets grow they will benefit from the resultant economies of scale and enhanced net performance. Given that the Baillie Gifford Japan Trust has net assets of around £420 million and Edinburgh Worldwide Investment Trust of approximately £270 million investors will see the benefit of these changes with immediate effect. The respective boards are to be applauded for securing lower fees for investors and boosting investor returns.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Baillie Gifford Japan Ord962.52 GBP-2.28Rating
Bankers Ord114.13 GBP-3.28Rating
City of London Ord365.43 GBP-3.32Rating
Edinburgh Worldwide Ord299.31 GBP-3.13Rating
Scottish Mortgage Ord1,475.10 GBP-0.83Rating

About Author

David Holder  is a senior investment research analyst at Morningstar