InvestmentsMar 25 2014

Fidelity ‘using market clout’ to cut trust fees

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The director of closed-end funds research at Morningstar highlighted the fund giant’s decision to reduce the AMC from 1.2 per cent to 1 per cent on the £820.5m Fidelity China Special Situations investment trust.

The AMC already dropped from 1.5 per cent to 1.2 per cent last April in an example of the “steady drip of fee reductions” seen on closed-end funds since RDR took hold, Ms Beard said.

However, she said that cutting the maximum performance fee by a third to 1 per cent was even more significant, as Dale Nicholls won’t inherit “a credit of outpreformance” when he takes over as manager in April following Anthony Bolton’s rollercoaster time at the helm.

Mr Bolton, who managed the hugely successful Fidelity Special Situations fund from 1979 to 2007, was lured back from semi-retirement to kickstart the China Special Solutions fund in 2010. But his reputation as a star manager was tarnished as the trust’s net asset value fell by 6.2 per cent over three years.

However, Mr Bolton has presided over a last-minute turnaround, which saw the trust produce a NAV of 10.9 per cent for the six months up to 30 September last year, compared to the benchmark MSCI China index’s loss of 1.9 per cent.

Alistair Cunningham, director of Surrey-based Wingate Financial Planning, said: “Lower fees are positive but if one believes in active management, the cost of that service should not be as high up the list of priorities.”