InvestmentsFeb 25 2015

F&C investors could face higher fees after major outflows

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F&C investors could face higher fees after major outflows

F&C Asset Management investors could be faced with higher charges on some funds after a mass outflow from Friends Life hit a range of retail products.

Seven F&C funds suffered a significant decrease in their assets under management last month, including the F&C Global Bond, F&C UK Equity Income, F&C UK Smaller Companies and F&C Responsible UK Equity Growth funds.

Remaining investors may now face higher ongoing charges in those funds as a substantial reduction in assets without a reduction in fixed expenses could lead to higher overall percentage fees.

However, investors have not been hit by any trading costs associated with the shrinking fund size as the assets have been transferred rather than the managers having to sell out of holdings, as would be the case if cash was being redeemed.

A trio of institutional funds, which are listed in Investment Association sectors, were also hit, with the F&C Institutional UK Smaller Companies fund plummeting from £132.2m to a mere £2,000.

The outflows came as part of a previously announced shift of £12.2bn of Friends Life equity and multi-asset mandates from F&C to Schroders, a move announced last March.

Friends Life also transferred a further £2.3bn of sterling fixed income assets to its own managers in Friends Life Investments.

The F&C Global Bond fund, managed by Michiel de Bruin and Malika Gulabani, suffered the biggest single outflow, with assets tumbling from £724.3m to £19.6m.

Elsewhere, the firm’s UK Equity Income fund fell from £183.6m to £65.8m. the UK Equity Growth fund dropped from £628.8m to £379.2m and the F&C UK Smaller Companies fell to £33.9m from £122.1m.

A spokesperson for F&C said: “Our growth strategy has been in place since 2013, which anticipated strategic partner withdrawals. Since then we’ve had improved positive inflow momentum in our consumer and institutional business.

“F&C continually monitors the costs of the funds and reviews its fund range.”