Platform giant Skandia has gone back on a decision to close two Invesco Perpetual life funds it said would become “untenable”.
The platform decided to close the Skandia Invesco Perpetual High Income fund and Skandia Invesco Perpetual Income fund and move clients into a newly created vehicle, the OMW Old Mutual Woodford Equity Income fund.
Paul Feeney, chief executive officer of Old Mutual Wealth, said in a letter written to investors on August 22 that the firm had been stuck “between a rock and a hard place with regards to how we manage Neil Woodford’s resignation” and that these were “truly exceptional circumstances.”
He added he expected the majority of investors to move to Mr Woodford’s fund meaning the cost of running the Invesco products would rise to “untenable” levels.
However, the platform has now said it will keep the two Invesco funds open claiming it is confident the fund charges are “stable”. It has also said the costs of the Invesco funds have been reduced to 1.2 per cent from 1.3 per cent.
The Woodford Income fund will still be added to the Skandia Life range with charges of 1.1 per cent. It opens next month.
Paul Feeney, chief executive of Old Mutual Wealth, said he had “listened” to advisers.
“What we heard from advisers and their customers was that they welcomed the addition of the Woodford Income fund to our life range and the price we have negotiated for them, but they wanted the Invesco Perpetual funds to remain open,” he said.
“We have acted to keep those funds open at a reduced cost. With the continued support of Woodford Investment Management, we have been able to add the new Woodford fund to the range at the original price. This gives advisers and their customers’ choice of where their money should be invested.”
In the original note to investors, Skandia said that trading costs from the purchase of the new fund for investors was expected to be roughly 1 per cent, meaning it would have cost investors around £6.4m for their collective £640m mandate to be moved.
However, Skandia also stated the TER on the new funds would be 1.10 per cent, compared with 1.30 per cent for the old funds, and that this would save money in the longer term.
Craig Newman, chief executive of Woodford Investment Management, said: “We empathise with the predicament faced by financial advisers and, of course, support their desire for choice and control.
“We have an excellent relationship with Skandia and look forward to working with them in the years ahead.”
