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Cofunds reveals unbundled charging structure

Cofunds has revealed its new unbundled charging structure made up of a £40 annual charge and a sliding scale of annual management charges from 0.29 per cent to 0.15 per cent.

Investors with assets worth up to £100,000 will be charged 0.29 per cent, between £100,001 and £250,000 they will be charged 0.26 per cent, between £250,001 and £500,000 they will be charged 0.23 per cent, between £500,001 and £1m the charge will be 0.2 per cent and over £1m the charge will be 0.15 per cent.

The unbundled proposition is due to launch in July next year, although clients will be able to stay with the current bundled proposition if they wish. Cofunds says it will not follow Fidelity’s lead in publishing the fund manager payments it receives from its bundled proposition which will continue to run until the rules are changed by the FSA.

Cofunds says it is requesting a clean share class of 0.75 per cent from fund managers for the new unbundled model and has removed switching charges.

Cofunds chief executive Martin Davis says: “We believe we have the scale to be able to say to fund managers that this clean share class is the way things are going.”

Davis (pictured) added the firm expects pre-tax profits to be higher in 2011 than the £7.9m recorded for 2010 and expects to continue to increase profits.

He says: “We have been very strong so far this year and we are going to be embarrassingly strong in Q3 as huge numbers come onto our platform.”

Cofunds says it is expanding its product range and will soon make a Junior Isa available via its execution-only service. It is also about to begin a pilot with stock broking firms to make ETFs, individual securities and investment trusts available via the platform.

Cofunds says it has spent around £6m on IT over last year. The platform currently has around £34bn assets under administration.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Well done FSA. By messing around with something which you do not understand you have increased fund costs for most clients. How many clients have asked to pay more for transparency?

    Look at Cofunds example. Fund cost 0.75pbs, Cofunds 0.29pbs and IFA 0.5bps = 1.54bps plus £40. Currently the same client pays 1.5%.

    Sure HNW clients like Hector and Sheila will do better but yet again the FSA attacks the ordinary investor.

  2. Are you sure Cofunds only has £34m in assets under administration? I am pretty sure its closer to £34bn, with a quick Google search:

    Anyhow, its very pleasing to see a platform finally making some good profits!

  3. I am sure my client I am now visiting will be riveted by the choice between Bundled and Unbundled pricing. He’s only just got his head around what platforms are!

  4. Having an annual charge, is like saying, we don’t want small stuff! It does complicate the math though, as client circumstances can change over time.

  5. Mr Smug ‘Look at Cofunds example. Fund cost 0.75pbs, Cofunds 0.29pbs and IFA 0.5bps = 1.54bps plus £40. Currently the same client pays 1.5%.’

    The FSA are right to introduce such measures to provide clarity to investors on charges. However, surely this is a simple route for Cofunds to nick another 4 bp as well as charging £40 on top? If not then why do their charges not equate to 1.5% – the FSA have not set their charges.

    Also, 0.75% and £40 to make switching free? How does that work? A typical swicth based on the value of the individual fund you are switching costs as little as a tenner (depending on fund value). Two of these a year still costs less than half of the £40 you pay for the service as well as the 0.75 built in too – all sounds rather expensive to me.

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