Multi-assetApr 3 2017

FCA study prompts OMGI to overhaul 'Cirilium' fees

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FCA study prompts OMGI to overhaul 'Cirilium' fees

Old Mutual Global Investors (OMGI) has responded to the increased focus on costs stemming from the FCA’s asset management market study by “simplifying” charges on its £5bn Cirilium fund range, marking the first direct impact of the industry probe.

The fund firm will ditch the ongoing charges figure (OCF), currently a common industry metric and one supported by the Investment Association, on the multi-asset portfolios and replace it with a fixed ongoing charge (FOC).

The change illustrates the pressure on asset managers to become more open around fees. Warren Tonkinson, OMGI managing director, said: “This change is reflective of our desire to introduce a clear and consistent approach to fund charging, aligned with the regulator’s drive to improve overall pricing transparency in the asset management industry.”

The FOC will still include the annual management charge, ongoing costs of investing in underlying funds and the “variable costs associated with managing a fund”. However, investors must now be given 60 days’ notice ahead of any change to the charge. OMGI said this would ensure changes are made clear to clients and “conducted in a controlled manner”.

The FOC excludes transaction fees, with these being disclosed separately by OMGI, as was the case with the OCF.

OMGI has written to clients informing them a new pricing structure will be implemented across the firm’s Cirilium Active and Passive products from June. Costs on the portfolios will not increase as a result of the overhaul.