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Newton chief slams ‘rip-off’ fund charges

Many investment funds are a rip-off, with hidden charges often bringing the total expense ratio to double the stated annual management fee, claims Newton private client director Harry Morgan.

Morgan told Money Marketing Live that this is par- ticularly the case with prop- erty funds, where charges can effectively reach 5 per cent, stripping away much of the investment growth.

He said fund managers should realistically be able to run money for close to 1 per cent for most asset classes. He pointed out that this is not possible with property funds, which as well as the manager’s fees also have to fund the costs of solicitors, valuers and property management. He said the charges levied by many, often in a clandestine fashion, are too high.

Seven Investment Management co-founder and director Justin Urquhart Stewart said the TER, often mooted as a more transparent way of comparing charges, is not infallible as it does not include the cost of the initial charge, funding commission or the impact of bid/offer spreads.

Morgan said: “There are often hidden charges on property funds and TERs do not tell the full story. Some of these trusts are frankly a rip-off and in a low-return environment, it is not sustainable.”


Compulsion could be back on agenda

The appointment of David Blunkett as Work and Pensions Secretary has increased the likelihood of compulsion, according to leading figures in the industry.

L&G goes beyond bare minimum

Legal & General has established a fourth issue of the protected capital and growth plan 2, a FTSE 100 linked guaranteed equity bond that provides a full capital return plus a minimum level of growth after six years.

Looking back at 2015

By Fiona Tait, Pensions Specialist 2015 was quite a year for pensions. Change, more change, and proposed changes to the changes. The Spring Budget – pre-election plans With everything that has happened since, it is hard to remember what happened in March. Following on from the bombshell of the 2014 Budget, the Chancellor confined himself […]


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