View more on these topics

Fidelity slashes UK tracker fee to 0.1%

Fidelity has reduced the annual charge on its UK index tracker fund to 0.1 per cent from 0.5 per cent and says investors in trackers could save a total of 55m by switching.

The total expense ratio for the Moneybuilder index fund falls from 0.7 per cent to 0.3 per cent, which Fidelity says is the lowest in the market.

The fund company’s research shows that 16 fund groups are charging 1 per cent or more on UK tracker funds with a combined value of 4.6bn, making up over one-third of the 12.3bn invested in UK trackers. It says seven UK tracker funds with a combined value of 346m still have front-end charges of up to 5.5 per cent.

UK managing director Richard Wastcoat says: “Too many are overpaying for their funds, in some cases by 10 times as much. Index products are commodity products and should be brought primarily on price.

“There is no reason for fund companies to charge upward of 1 per cent on these funds, let alone levy an initial charge as well.”

Legal & General runs the UK’s biggest tracker fund, which has a 0.5 per cent annual charge. Spokesman Mike Connolly says: “We believe that we offer a broader range of tracker funds than Fidelity and there are no plans to lower our charges.”

Virgin Money charges 1 per cent on its tracker. Spokesman John Franklin says: “We have seen what Fidelity are offering but we look at it as a loss-leader from their point of view.

“Our customers are very happy with the charges we are offering and there are no plans to drop our charges.”

Wastcoat says: “This is a competitive offer and while there are different dynamics for different businesses, we are certainly not running it as a loss-leader. We are trying to broaden the savings market.”

Recommended

Shake-up of senior management at TMB as directors leave for Deutsche Bank

Nigel Payne is assuming full responsibility as managing director of The Mortgage Business replacing current md Bill Dudgeon.Current TMB directors Bill Dudgeon, Mark Bergin, David Parry and Paul Graham are leaving the business to join Deutsche Bank at the end of September. Deutsche has been widely tipped to enter mortgage lending business by the end […]

Move with the times

Any innovation in the equity-release market is to be welcomed. Prudential’s Property Value Release product seems to have all the right features and the rate – at 6.45 per cent – is there or thereabouts. Portman charges 6.15 per cent while Mortgage Express charges 6.64 per cent. Northern Rock has a fixed rate of 5.99 […]

TMB quartet quit for Deutsche Bank

Four directors of The Mortgage Business are joining Deutsche Bank in what is the bank’s clearest indication yet that it is moving into lending in the UK. Deutsche has recruited TMB managing director Bill Dudgeon, sales and marketing director Mark Bergin, strategy and planning director David Parry and operations director Paul Graham. The four will […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment