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HSBC cuts tracker charges

HSBC Global Asset Management has announced it will cut the annual management charge (AMC) on its seven index tracking funds down to 0.25%.

The reduced charges will apply to new and existing investors and will take effect from September 1.

The largest cuts are on the group’s FTSE 100, American Index and European Index funds, which currently charge a 1% AMC. Meanwhile, the FTSE 250 and Pacific Index currently charge a 0.75% AMC, while the FTSE All-Share and Japan Index funds carry a 0.5% AMC.

A result of the cuts in the AMC, the total expense ratios (TERs) of the seven funds will range from 0.27% (FTSE 100, FTSE 250 and FTSE All-Share) to 0.37% (Pacific Index).

The group says the new charging structure will not pay commission.

In a press release, Andy Clark, managing director, wholesale, says the move recognised that the Retail Distribution Review (RDR) would create the need to develop factory gate pricing consisting of a clean fee and advice fee.

He says: “We see these lower-cost trackers taking a bigger slice of the wealth management market, as low cost beta takes a bigger role at the core of an investment portfolio.

“While the debate between active versus passive rages on, we believe there is a clear role for both in all clients’ portfolios.”

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