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M&G warns of ‘dangerous’ preferential share classes

M&G says it is a dangerous move for asset managers to offer preferential share classes as such moves could jeopardise the quality of their products.

In an interview with Money Marketing, M&G global head of sales managing director Jonathan Willcocks says the asset manager has no current plans to launch a lower share price for platform providers.

Willcocks says: “There is a lot of talk about these deals at the moment and I think it is a very dangerous direction of travel. Once you have launched a special share class for one firm you have to launch for another, and then another.

“Before long the lower price is now your standard price and you have to launch more cut-price funds. At some point the asset management model fails because there is a price for fund management and if you keep bringing down your prices you do not deliver a top product anymore. I think this could land managers in trouble.”

Willcocks adds that he believes people will pay more for better quality products and that fund managers can continue to charge 75 basis points for funds as long as they deliver consistently high performance.

Thomas and Thomas Financial Services managing director Darren Lloyd Thomas says: “There comes a point when fund managers cannot afford the resources to run a high quality fund if they keep reducing prices. There should be more pressure on platforms to reduce their prices.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. At last. One of the fund houses prepared to stand its ground. This is how it should be. One flat price. If sold direct/retail then an admin fee can be added to reflect the extra administration. What is difficult with that.

    Fund X is priced at 0.75% if purchased through wrap and platforms (whether advised or not). And 1.25% if purchased direct by retail investors seeking to DIY invest.

    All I ask is that we have some commonality amongst fund managers as to what they call their clean funds (Although we are too far down this road now for that to happen). So far we seem to have A, B, C, I, R and Z share classes depending on which fund house you talk to.

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