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Fidelity introduces variable management fee on OEICs

Fidelity introduces variable management fee on OEICs

Fidelity International has implemented a variable management fee across a number of funds, cutting the base annual management charge (AMC) by 10 per cent for some.

The offer is available across five active equity funds in its UK domiciled (OEIC) fund range.

Investors will have the option to invest in the variable management fee clean share class in the Fidelity Special Situations, Fidelity European, Fidelity Asian Dividend, Fidelity Global Special Situations and Fidelity American funds.

Those investing in these share classes will have access to a 10 per cent lower base AMC of 0.65 per cent.

The variable part of the fee will then symmetrically slide up or down depending on how the fund performs relative to its pre-defined market index on an annualised three-year rolling period, after all fees and charges.

This scale will reach a maximum of +0.2 per cent above the annual management charge and go as low as -0.2 per cent below, meaning the maximum and minimum fee levied would be 0.85 per cent and 0.45 per cent respectively.

Paras Anand, chief investment officer for equities, Europe at Fidelity International, said: "We have listened and responded to the growing debate around the value of active fund management.

"Clients can now access our new variable management fee in some of our flagship funds, and over time, we plan to expand this offering to our broader fund range.

"The new structure clearly aligns Fidelity’s interests to that of our clients and, unlike other performance fees out there, we will give back during periods of relative underperformance.

"It demonstrates our ongoing commitment to providing the best possible value to our clients and we hope it will incentivise them to stay invested in active strategies over the long term." 

The news follows the launch of the same fee structure across five active equity funds in Fidelity’s Luxembourg domiciled (SICAV) Fidelity Funds range.

In addition, more than £2bn of assets in Fidelity’s investment trust range will move to a variable management fee as of 1 August 2018.

Alan Chan, director and IFA at London-based IFS Wealth & Pensions, said: "It could benefit investors but the devil will be in the detail.

"When choosing this new generation of funds, greater importance will need to be placed upon the benchmark used by the fund to measure its relative performance and the thresholds for underperformance or outperformance to trigger the variable AMC."

aamina.zafar@ft.com