Somerset imposes dilution levy across emerging markets range

Somerset Capital Management has imposed extra charges upon all new investors across its emerging markets fund range.

The ‘dilution levy’ will mean new investors will pay the costs associated with their investment in the fund, such as creating new units and buying new shares.

Meanwhile, all those selling out of the fund will pay for the costs of redeeming the fund units.

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From June 23, investors buying or selling Edward Lam’s top-performing £608m Somerset Emerging Markets Dividend Growth fund will pay a 0.4 per cent charge.

The charge will be 0.5 per cent for Mark Asquith’s £36.5m Somerset Emerging Markets Small Cap and 0.3 per cent for the £28.7m Somerset Global Emerging Markets, which is run by Edward Robertson.

Previously the dilution levy had only been imposed on very large inflows or outflows but from June 23 all investors will have to pay it.

Somerset said the levy will mean that existing investors would not see their holding diluted by investors buying in or selling out and would “ensure that the cost of transaction is passed on to those responsible for the transactions, rather than everyone else”.

The firm emphasised that the money received from the levy would go directly into the fund, not to Somerset itself.