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M&G to raise fees across Oeic range

M&G is set to hike charges across its entire open-ended fund range when it converts its unit trusts to Oeics at the start of next month.

The proposal, outlined in a letter to unitholders, will see the admin fee on its funds increase by seven basis points to 0.15 per cent from 0.08 per cent. The move is still subject to unitholder approval but, if successful, will raise an extra £7m a year for M&G.

The fund manager says the increase is due to a “need to invest large sums in new computer systems”. But competitors have questioned the move to increase the admin fee, which will not show up in the annual management charge but will be paid for by investors.

M&G claims it still has some of the lowest total expense ratios in the industry. The letter, signed by chief executive Gary Shaugnessy, says: “The small increase will still mean our funds typically have lower charges than similar funds provided by our major competitors.”

A rival fund manager says: “To tell the public you are increasing your total expense ratios to invest in computers is, to put it generously, odd.”

Simpsons partner Andrew Merricks says: “I find it astonishing that they are charging investors for new computers. Maybe ScotAm have got some they can borrow.”

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