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Brooks Macdonald cuts model portfolio charges

Brooks Macdonald cuts model portfolio charges

Brooks Macdonald has cut the ongoing charges for its platform managed portfolio services as the price war among fund houses continues.

The discretionary fund manager will now levy an ongoing charge of 1 per cent for its active range and 0.5 per cent for its passive range — down from an average of 1.22 per cent and 0.67 per cent for active and passive funds respectively.

It will also cut its headline fee (the management fee charged by the manager, included in the ongoing charge) from 0.3 per cent for both portfolios to 0.25 per cent for its active range and 0.2 per cent for the passive products.

According to Brooks Macdonald the move comes in response to a growing number of advisers requiring “sophisticated but value driven solutions” for their clients.

The asset manager suggested there would be further pressure on the fees charged by these services as advisers continued to look for the best value for their clients.

A spokesperson added: “Investment managers will need to look both at their own costs, and the cost of the underlying investments in their portfolio.”

The MPS space has become more competitive in recent years as more DFMs launched a service and others cut their rates to gain market share.

In January 2018 Brewin Dolphin cut its charges to between 0.51 and 0.69 per cent while Invesco launched a new MPS earlier this year (September 27).

But Alan Steel, chairman of Alan Steel Asset Management, said the fee charged by Brooks Macdonald was still too high for the service it provided.

He said: “If it’s not difficult for us to research funds and asset allocation while charging an average of 0.5 per cent, plus free switches, how come it’s difficult for them?”

Paul Stocks, director at Dobson and Hodge, agreed, adding that he couldn’t see what an MPS did that a standard fund did not, especially when a typical multi-asset fund had a lower ongoing cost than the 1 per cent set to be charged by Brooks Macdonald.

imogen.tew@ft.com

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