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Investec’s fee cut receives mixed reaction

Investec Asset Management has waived the initial charge across its entire UK Oeic fund range.

Last week, the asset manager scrapped the initial charge on its risk-rated Managed Solutions range, which holds Alastair Mundy’s Investec Cautious Managed fund and John Stopford’s recently launched Investec Diversified Income fund, and its specialist range, which includes Bradley George’s Investec Enhanced Natural Resources fund and Mundy’s Investec UK Special Situations fund.

ML Financial Associates director Simon Lister says: “I can see more of this happening. When you look at the overall market, there is a trend for more cost efficiencies when it comes to areas such as distribution, advertising and staff, to a degree. This means they are leaner and can pass more on to investors.”

However, Hargreaves Lansdown senior investment analyst Adrian Lowcock notes that initial charges are already often discounted by platforms and questions the merit of scrapping them.

He says: “You would not necessarily want a client to go direct because as a fund management group you would want to focus on fund management. The industry developed the way it did because it effectively outsourced the things that were not fund managers’ core areas of expertise.”

The asset manager itself says the move comes in response to client demands on both the construction of its fund range and the impact of the RDR.

Investec Asset Management UK client group managing director David Aird says: “We completely support the RDR’s commitment to unbundling, and hopefully reducing costs incurred by investors. We believe that waiving our initial fee is good both for investors and for the fund management industry as a whole.”

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