EuropeanAug 13 2014

Initial charge abolished on Hibbert’s BlackRock fund

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

Last November, it introduced a 1 per cent initial charge for platforms in a bid to stem inflows into the fund.

But since that was put in place, the size of the fund has dropped to £1.6bn from more than £2bn, prompting BlackRock to withdraw it, 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 will 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 A-share and D-share classes to new investments, although existing clients were able to stay invested. Existing regular savers could also go on topping 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.

Despite the removal of the intermediary charge, the direct charge remains. There is 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.