Baillie Gifford  

Baillie Gifford slashes open-ended fund charges

Baillie Gifford slashes open-ended fund charges

Edinburgh-based fund house Baillie Gifford has announced fee cuts across a range of 27 of its open-ended funds.

Among the funds to have the fee cut applied is the £1.6bn Baillie Gifford Japan fund.

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It has returned 161 per cent over the past five years, compared with 111 per cent for the average fund in the IA Japan sector in the same time period, to rank as the third best performer in the sector over the past five years.

The annual fee on this fund is to drop from 0.65 per cent to 0.6 per cent annually.

The annual fee on the Baillie Gifford European fund has been reduced by ten basis points to 0.55 per cent, from the previous level of 0.65 per cent.

Andrew Telfer, joint senior partner at Baillie Gifford, said: “Active managers should take the initiative in today’s environment.  Value for money is an often neglected element of the fund buying process.  

"Investors should be able to choose between passive and attractively priced active funds alongside considering the quality and future capability of active funds to deliver after-fees outperformance.”

Claire Walsh, Chartered Financial Plannern at independent financial advisory firm Aspect8 in Brighton, said: “It seems inevitable that investment managers will increasingly reduce fees - all good news for investors.”

The Financial Conduct Authority has placed increased pressure on investment managers to make sure their fees better reflect their costs.

In June the regulator stuck with plans to oblige fund firms to introduce all-in fees as part of a series of overhauls proposed in the final report of its asset management market study.

The package of measures unveiled by the watchdog, designed to ensure retail investors get value for money, will also require firms to introduce two independent board directors, do more to ensure benchmark presentation is accurate, and pass on economies of scale more effectively.

The FCA has proposed fund managers would be required to identify economies of scale in the direct and indirect costs of operating funds and consider the introduction of “break points” at which fund charges are lowered.

They may also have to consider whether savings should be shared with investors, with those not passing on such savings forced to explain their decision.

david.thorpe@ft.com