True Potential and UBS have been forced to rethink a series of funds they have launched, after the regulator expressed concerns.
The funds, which were launched earlier this month, had originally been designed to have a variable price, meaning investors would pay less in ongoing fees if the funds returned less.
But after discussing the issue with the Financial Conduct Authority (FCA), the funds have been redesigned after the regulator expressed concerns investors would not understand the investment vehicles, according to Daniel Harrison, senior partner at True Potential.
He said: “We had intended to add a variable fee feature, but at the suggestion of the regulator we have removed this from the initial launch.”
He said True Potential therefore concentrated on value, by pricing the funds at 0.6 per cent ongoing charges and making them available immediately at this price, and added: “We will look to engage with the regulator again in the future and would hope to find a way to bring this innovative concept to the market.”
However, the funds were originally planned to be passive but will now be actively managed.
UBS will manage the funds, which are available in defensive, cautious, balanced, growth and aggressive risk profiles, and which have a minimum investment requirement of just £50.
Richard Lloyd, head of portfolio management, research and risk investment solutions at UBS Asset Management, said the funds target a range of five risk profiles and seek to capture opportunities for growth through a risk-managed, active asset allocation process.
Earlier this month the Investment Association published research into fees which found “zero evidence” of funds carrying hidden fees which hurt returns.
Mark Henderson, senior partner at True Potential Investments, said: “By using the investment expertise, precision and heritage of UBS, alongside our philosophy of providing low-cost funds with low minimum investment amounts, we have produced a range of funds that adapt to the market, always seeking to get the best returns for investors.”
The FCA was unable to comment at the time this article was published.
Paul Holiday, director of Norwich-based Greensky Wealth, said: “The FCA allows performance fees to apply to fund managers, so I don’t know what the difference is between that and what True Potential was trying.”
