Almost 40 fund firms have AMCs of at least 1.75 per cent on one fund in their range.
A survey by Money Marketing found that there are 83 funds from 39 fund groups with an AMC of 1.75 per cent or more. Fund groups say this reflects the specialist nature of the funds and the extra costs of research to drive outperformance but BestInvest head of communications Justin Modray says firms are being greedy.
He says: “If you were to apply an increase of 0.25 per cent to a fund of £500m, what you are effectively doing is adding an extra £1.25m. Some may need that money for research but others are just using them for bigger profits and bonuses.”
But Resolution Asset Management head of sales and marketing Jonathan Polin believes the group’s Argonaut European alpha fund is fairly valued. He says: “1.75 per cent for a high-alpha vehicle that is performing is absolutely fine as the capacity tends to be limited. But to use it for a bog-standard UK product is not right.”
Standard Life’s property fund recently hit the £1bn barrier and has already made an extra £2.6m from charging 1.75 per cent.
SLI head of mutual investments Jacqueline Kerr says the group considers it to be a specialist fund as it invests in direct property globally.
Premier has nine funds with an AMC of 1.75 per cent. Chief investment officer Richard Muckart says: “The headlines show 1.5 per cent is history for a lot of fund managers.”