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Old Mutual overhauls Cirilium fund charges in response to FCA study

Old Mutual Wealth 2014

Old Mutual Global Investors has changed the charges within the eight-strong Cirilium active and passive multi-asset portfolios in response to the FCA’s push for a fixed fee disclosure.

Effective as at 1 June, the range will include a fixed ongoing charge, instead of the current ongoing charge figure.

The key difference in the change is that OMGI now needs to give investors 60 days notice ahead of any change to charges.

The fee will include the annual management charge, the ongoing costs of investing in underlying funds and “the variable costs associated with managing a fund”.

The FOC excludes transaction fees, as does the ongoing charge figure.

The fund group already has a fixed charge structure in place for its UK fund range.

OMGI believes this approach will give investors “greater clarity and certainty” when selecting the funds.

OMGI managing director Warren Tonkinson says: “This change is reflective of our desire to introduce a clear and consistent approach to fund charging, aligned with the regulator’s drive to improve overall pricing transparency in the asset management industry.”

In its interim report on competition in the asset management industry, the FCA suggested a “all-in fee” for firms which would embed all costs for funds, including transaction fees.

But a number of fund managers, including OMGI, urged the FCA to abandon this proposal as it could cause a conflict of interests in relation to trading levels.

OMGI suggests that a charge inclusive of transactions costs “could pose an unintended conflict of interest between asset managers and the investors for whom they manage money by providing an incentive to reduce the level of trading for reasons unrelated to market events”.

Charges within the Cirilium range go from a high 1.99 per cent for the moderate and balanced funds’ A share class to 0.85 per cent for the passive funds.

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