EquitiesAug 18 2016

Montanaro shuts 0.25% UK Income share class as AUM jumps

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Montanaro shuts 0.25% UK Income share class as AUM jumps

An increase of assets under management within the Montanaro UK Income portfolio means fund buyers will no longer be able to gain exposure to the product at a cut-price rate.

Montanaro has suspended the fund’s seed share class, which had an annual management charge (AMC) of 0.25 per cent, and replaced it with a new share class offering an AMC of 0.75 per cent.

This increases the ongoing charges figure (OCF) from 0.34 per cent to 0.84 per cent.

The firm first launched the seed share class in April 2015 - when the fund was just £70m in size - in an attempt to boost assets. It waived the AMC entirely prior to the portfolio reaching the £100m mark, then introduced the 25 basis point charge.

Montanaro said at the time that the 0.25 per cent share class would only remain open until assets reached £150m.

UK Income - which launched in 2006 - remains top quartile in the IA UK Equity Income sector over three and five years, but has struggled more recently given its weighting to small and mid-cap stocks. The average market cap of a holding is currently around £1.2bn.

According to FE Analytics, over one year the fund has returned 2 per cent compared with 5 per cent for the IA UK Equity Income sector. However, over three years it has returned 31 per cent compared with 25 per cent for the sector.