EuropeanAug 13 2014

BlackRock to waive initial charge on Hibbert’s fund

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BlackRock is set to remove the initial charge placed on Alister Hibbert’s £1.6bn BlackRock European Dynamic fund following significant outflows.

In November 2013, the firm had placed a 1 per cent initial charge for platforms on the fund in an attempt to stem inflows into the fund.

But since the charge was put in place the size of the fund has dropped from more than £2bn to £1.6bn and so BlackRock has decided to withdraw the charge effective from August 20.

Asset managers often bring in high charges to curb investments into funds, a practice known as ‘soft closing’, to head off the possibility that the funds could grow to such a large size that they become impossible to manage effectively.

Last year, BlackRock moved to ‘soft close’ the fund by closing its existing A-share and D-share classes to new investments, although existing investors were able to remain invested. Existing regular savers could also continue to top up their investments.

The group then launched new FD share classes, which had the 1 per cent initial charge for intermediaries, and FA share classes for direct investors which had a 5 per cent initial charge.

In spite of the removal now of the intermediary charge, the direct charge remains.

BlackRock said there was still an absolute capacity limit of £2.5bn on the fund and the firm will reassess whether to levy the charge again if the fund nears that limit.