M&G reduces cost of 45 funds in fee overhaul

M&G reduces cost of 45 funds in fee overhaul

M&G has reduced its fees on 45 of its funds as it continues to review the charges, performance and service of its UK-based range.

In an email to affected customers, seen by FTAdviser, the fund house said a range of M&G UK open-ended funds would benefit from a reduction in cost.

The reductions in prices were not uniform across the range of funds or share classes because its review had identified that some portfolios required greater reductions than others based on value for money, M&G said.

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For example, some shareholders in the M&G Absolute Return fund will see their ongoing charge drop from 0.6 to 0.45 per cent, while those in the M&G Optimal Income fund will benefit from a reduction in cost of between 25 and 35 basis points.

The M&G UK Select fund will cost 1.1 per cent, down from 1.2 per cent, for shareholders in the ‘A’ and ‘X’ classes, while those in the ‘I’ and ‘R’ classes will continue to pay 0.7 per cent.

All investors in M&G’s once giant Recovery fund will see a reduction of between 15 and 25 bps, depending on share class, and the same goes for the M&G Positive Impact fund.

Other funds set to have their fees cut include the Asian, Corporate Bond, Dividend, Global Strategic Value, Japan, Managed Growth, Smaller Companies and the Sustainable Multi-Asset range.

All changes come into effect on February 15.

The price overhaul comes after M&G’s assessment of value report, published last summer, found three of its portfolios did not offer value for money.

In the report, M&G revealed it was looking into the value provided by its entire fund range and said it was conducting a “major review” of the annual charges on its products.

It had already introduced a simple annual charge for all its funds in 2019 in a bid to “realign fees” to reflect the cost of managing the portfolios, a move which saw the charges reduced on a number of funds.

At the time, however, commentators claimed the new pricing failed to make the products more competitive for many investors.

A spokesperson from M&G said: “We are continuously seeking ways to offer better value to our customers and [...] this reduction builds on other initiatives we introduced in recent years. 

“For example, we abolished entry and exit charges for good, simplified and made our charges more predictable and introduced economies of scale discounts for the benefit of those investors in our larger funds.”

M&G said the move would increase the competitiveness of its range in the UK market and put M&G on a “stronger” footing to retain and grow its assets under management.

Its major review is not yet complete, and so far only customers invested in those funds and share classes where the pricing element of the review has finished have been contacted.