Fees  

We are not immune to fee pressure, says Fidelity

We are not immune to fee pressure, says Fidelity

The head of investment trusts at Fidelity has said the firm will not be immune to further pressures on fees.

Alex Denny told FTAdviser that fees might begin to be pushed down to a point where active managers will turn around and say that beyond a certain price, they can’t be an active manager anymore.

He said: “I think there are pockets where, in order to remain competitive, there will be further squeezes on investment managers. And Fidelity is very far from immune to that.

“In order to maintain our active management credentials, [highlighting] the strength of the research team, we will continue to charge active management fees. But I absolutely don't believe that the squeeze is finished yet.”

Two weeks ago Fidelity International announced it would reduce the ongoing charges figure (OCF) on five of its multi-asset allocator funds.

The firm lowered the OCF across the funds on May 11 from 0.25 per cent to 0.2 per cent in a move it said made its funds one of the cheapest in the industry.

Fidelity is also in the process of scrapping its variable management fee share classes available to investors in its open-ended funds, saying investor interest had remained limited throughout the fees' lifespan.

Last summer, a report from the Lang Cat predicted that the cost of central investment propositions for clients is likely to fall by nearly a third over the next five years as price disruption ripples through the investment space.

The report predicted that the total cost of ownership for clients’ CIPs could drop by 50 bps from the current average of between 1.7 per cent and 2.3 per cent.

This would bring the average annual total cost of a CIP to 1.55 per cent.

A separate report last summer showed that 60 per cent of asset managers believed there would be continued downward pressure on fees for at least the next decade

Alpha FMC’s Product Trends Survey also showed that 27 per cent of asset managers thought the pressure would last three more years.

sally.hickey@ft.com