M&G launches D2C service with lower fees

M&G launches D2C service with lower fees

M&G will launch a new direct to consumer (D2C) online service to allow new and existing direct investors access to lower-cost share classes.

The online D2C service, launching this summer, will give all existing and new customers with at least £5,000 invested the option of lower charges.

Via the new service, M&G said its Dividend fund will see its ongoing charges figure (OCF) fall to 1.16 per cent, around 50 basis points lower than the current cost paid by direct clients.

Article continues after advert

The OCF for its Corporate Bond fund will fall to 0.91 per cent, a reduction of 0.25 per cent. The asset manager also revealed it had already scrapped entry charges earlier this year.

Unlike legacy platform customers, who were moved to unbundled share classes under the sunset clause on April 6, many legacy D2C investors are still paying higher annual charges.

However, in contrast to on-platform customers who were moved across into cheaper share classes automatically, the onus does remain on M&G’s 190,000 existing direct customers to move across.

The service may also be attractive to new customers, many of whom will now be paying more to access the company’s funds via platforms.

Jonathan Willcocks, M&G global head of retail sales, said: “We’re also offering our direct customers a more modern, round the clock, execution-only service.”

The fund house has has also said it will absorb equity research costs for its funds as it joins the rank of asset managers preparing for Mifid II rules which will unbundle dealing commissions.

M&G said it would absorb research costs itself as of January 1 next year.

The move comes after Investment Adviser research revealed many asset managers had not yet made progress on tackling the unbundling of research and transaction costs.

Of the 42 fund houses contacted in April, only five provided details. M&G joins the ranks of Woodford Investment Management and Baillie Gifford in fully absorbing costs.