Pru latest to launch clean share classes

Prudential has revealed clean share class versions of several key funds with charges equal to their bundled predecessors.

The clean share classes, known as ‘P shares’ will be available to fund platforms from this month and include clean versions of Pru’s managed defensive and cautious managed growth funds, as well as its five Dynamic Portfolio funds of funds.

The bundled versions of the Dynamic Portfolio funds carry an annual management charge of 1.4 and 0.9 per cent for their A and R share classes respectively, where the A version includes adviser commission and a platform fee and R includes just the latter. The new P share class carries a charge of 0.65 per cent.

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With a difference of 75 basis points, the pricing of the clean funds are on par with their bundled versions.

Likewise, the clean version of Pru’s managed defensive and cautious managed growth funds carry a charge of 0.6 per cent, 75 basis points lower than the 1.35 per cent AMC of its A class which would include adviser commission and platform fee.

Controversy emerged this year when it became apparent that many clean funds on the Cofunds and Standard Life platforms were more expensive than their bundled counterparts.

Fund groups have responded with various defenses, with Aberdeen among those claiming the more expensive share classes are more fairly priced and that investors should vote with their money.

Platform cash rebates will be banned in 2016, the Financial Conduct Authority has said.

Paul Fidell, investment expert at Prudential, said: “The introduction of clean share classes is a welcome move for investors as it will ultimately make fund charges more transparent, while also signalling a fundamental change to the way the collective market operates.

“The forthcoming regulatory and fiscal changes surrounding rebates are accelerating the introduction of clean share classes.”

The Pru clean share classes are now available on the Standard Life and Aviva platforms and Prudential claims other platforms will follow.