Charges Cut on Passive Funds in January

NEWS YOU CAN USE: Virgin Money slashes tracker fee, AJ Bell cuts fees on multi-asset portfolios, BlackRock loses LatAm fund manager

Emma Simon 31 January, 2019 | 12:24PM
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charges cut on passive funds in January pensioner investor fees

Fund charges made the headlines this month, with a long-overdue reduction on the fees charged on Virgin Money’s FTSE All-Share tracker. When this fund was launched in the mid-1990s its main selling point was that it offered a low-cost alternative in a market dominated by higher-charging active funds.

Since then the market has changed beyond recognition. Passive strategies are more popular than ever, and annual charges have tumbled as a result, to as little as 0.06%.

However, for the past decade or so Virgin Money has continued to charge the full 1% fee to millions of investors, a charge that is now significantly higher than many active funds. It is now belatedly cutting this annual fee to 0.6%.

The start of 2019 also saw a number of fund launches. These included Investec’s first sustainable equity fund. This month also saw Witan announced the end of its popular regular savings scheme. As a result thousands of investors will see their holdings automatically transferred to the Hargreaves Lansdown platform.

Virgin Money Slashes Tracker Fee

Virgin Money has finally reduced the 1% charge on its flagship tracker fund. The firm had been received a barrage of criticism in recent years for charging a full 1% on a £2.7 billion fund which simply mirrors the FTSE All Share Index.

The fee was cut to 0.6% from January 25. This does not make it particularly competitive, but this fee does include the cost of the ISA wrapper, so investors don’t have to pay additional platform charges.

However, the cheapest tracker funds are now available from just a 0.06% annual charge.

This fee reduction comes after Virgin Money was bought by CYBG - the parent company of the Clydesdale and Yorkshire Banks.

Virgin isn’t the only provider still charging high fees on passive funds. Halifax also levies a 1% fee on its UK FTSE All Share Index tracker.

AJ Bell Cuts Cost of Passive Fund Range

Virgin isn’t the only one cutting fund costs. The platform, AJ Bell announced it is reducing charges on three of its passive multi-asset funds. The Passive Balanced fund will see its ongoing charge cut from 0.47 to 0.4%, while the Passive Adventurous and Moderately Adventurous funds have seen charged cut from 0.5 to 0.44%.

AJ Bell says it has been able to make cost efficiencies as these funds have grown in size and is now pass these savings on to its investors.

Witan Transfers Saving Scheme to HL

Witan is closing its investment trust savings and ISA schemes in May. The 16,000 investors who have opened a plan with the investment trust manager will have the option to transfer to Hargreaves Lansdown’s platform free of charge.

These investors have either regular savings plans or ISAs in either Witan (WTAN) or Witan Pacific (WPC). These were also known as the “Wisdom” and “Jump” savings schemes.

Investors have the option to switch to other platforms, but transfer fees may apply.

Witan’s chairman, Harry Henderson, said the investment trust provider could no longer offer the broad array of digital services that savers and investors demand today. Witan has around £420 million asset under management through this direct savings platform.

Other investment trust providers, such as Jupiter, JP Morgan and BlackRock have all made similar moves in recent years.

RLAM Launches New Multi-Asset Fund

Royal London Asset Management has launched a new multi-asset fund. This fund will be managed by the company’s head of multi-asset, Trevor Greetham. It will target a return of 4% over cash.

This fund will invest in both UK and overseas assets and will deploy both active and passive strategies.

Geetham says the fund will follow a twin-track approach, using ‘risk premium’ strategies - that aim to get returns from positive market trends - alongside a ‘tactical asset allocation’ strategy, which looks to exploit market opportunities, particularly during bear markets.

Investec Launches Sustainability Fund

Investec Asset Management is launching its first UK Sustainable Equity fund. The fund will be run by Matt Evans, alongside the firm’s ESG team. It will invest in a portfolio of between 40 and 60 holdings, which will include both large- and smaller-cap companies. The fund aims to identify those making a positive contribution to society and the environment.

Investec suggests that investors do not have to compromise returns for principles. The fund’s target is to outperform the FTSE All Share by 3%, over a full market cycle.

David Aird, managing director of Investec’s UK Client Group says: “Sustainable investment is increasingly top of mind for our clients.”

Sarasin to Extends Range of Thematic Funds

Boutique manager Sarasin is looking to launch a retail version of its Climate Active and Food & Agriculture Opportunities funds. The managers says the track records of these institutional funds have been “terrific” both in terms of absolute terms and against the wider index. Head of global equities Jeremy Thomas says: “It is getting a lot of attention because it really is thematic - it is from field to fork. The Climate Active fund was set up for charities and is also very popular.”

As well as broadening the reach of these funds, Sarasin confirmed it was looking to launch further funds this year, based on its other key investment themes. These include, digitalisaiton, automation, evolving consumption and the ageing population.

Pension Cold Calls Finally Banned

The long-awaited ban on pensions cold calling finally came into effect on January 9, in a bid to thwart scammers.

From this date, it will be illegal for firms to make unsolicited telephone calls to customers on the subject of pensions. This will include offers for a free pension review.

The ban also extends to cover unsolicited texts and emails. Firms that do not abide by these new rules face fines of up to £500,000. This new regime will be policed by the Information Commissioner. 

BlackRock Loses Long-Standing Manager

BlackRock has appointed two new managers to run the BlackRock Latin American Investment Trust (BRLA), after Will Landers – manager of the trust since 2006 – announced he would step down in March.

The trust will now be run by Sam Vecht, managing director of the GEM equities team, and Ed Kuczma, a senior research analyst within the group’s global emerging markets team.

Both will be co-managers on the trust. In addition, Kuczma will replace Landers on the BGF Latin American Fund and BSF Latin American Opportunities fund.

Landers, and two analysts from the team based in Sao Paulo, announced their departure shortly before Christmas.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Baillie Gifford China Growth Trust Ord190.00 GBX0.00Rating
BlackRock Latin American Ord407.50 GBX2.64Rating
Ninety One UK Sustainable Equity I £ Acc137.87 GBP0.48Rating
Virgin UK Idx Tracking Trust282.20 GBP0.18Rating
VT AJ Bell Adventurous I Acc162.06 GBP0.17Rating
VT AJ Bell Moderately Adv I Acc150.76 GBP0.13Rating
Witan Ord241.50 GBX0.21Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for

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