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Nationwide scraps initial fund charges

Nationwide is revamping its fund range by scrapping initial charges, increasing annual charges and lowering the minimum monthly investment to 20.

The building society is also launching a cash fund which aims to deliver 2.5 per cent over base rate, with a rebate of the annual charge if it fails to achieve its aim on the first anniversary.

The target return fund, managed by Merrill Lynch, will invest solely in cash instruments and has a 1.5 per cent annual charge, dropping to 1 per cent after 10 years. It will be Sandler-compatible, fitting the criteria for stakeholder medium-term investments.

Front-end loads of 3 per cent have been scrapped on Nationwide’s four other funds but the annual charge on its balanced and UK growth funds has increased from 1.25 per cent to 1.5 per cent.

The annual charge on the high-income fund rises from 1 per cent to 1.25 per cent. This means the fund loses its Catmark. The annual charge on the tracker fund is still 1 per cent.

Minimum contributions are being dropped from 50 to 20 a month and dilution levies are being introduced on transactions where necessary to manage inflows and outflows.

Nationwide Investments managing director Alan Oliver says: “20 is enough to open an account, there are no initial charges and, what’s more, if the target return fund does not perform, we will, in effect, be refunding our fee.”

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