HSBC Global Asset Management has slashed fees on its tracker funds in a continuation of the price war among passive providers.
As part of changes coming into force from November 16 this year, the HSBC American Index fund will have an ongoing charge of 0.08 per cent, down from its current level of 0.18 per cent.
The HSBC European Index fund will see its ongoing charge halve from 0.2 per cent to 0.1 per cent, while the charge on the HSBC FTSE All-Share Index fund will drop from 0.17 per cent to 0.07 per cent.
The move marks a continuation of an aggressive reduction of charges among passive providers.
At the beginning of this month Fidelity Worldwide Investment cut ongoing charges on its UK, US, world and emerging markets trackers, following similar moves by BlackRock, Legal & General Investment Management and Vanguard in the previous 12 months.
The ongoing charge for the Fidelity Index UK fund, available via FundsNetwork and to certain wholesale clients, fell to 0.06 per cent from 0.07 per cent.
However, the product still can still cost up to 0.08 per cent depending on which platform investors use.
Ratings agency Moody’s recently claimed that the growth of passives had come at a cost to providers, using its October “Credit Outlook” statement to warn the price war was “credit negative” for companies operating in the space.
Moody’s said: “These attempts to attract a greater share of assets are credit negative for all managers of passive strategies [...] because they will squeeze their margins while chasing assets.”
