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Old Mutual puts on its hard cap

Old Mutual’s move to raise the annual charge on its UK select smaller companies fund has been slammed by intermediaries.

It will hard-close Dan Nickols’s outperforming £441m fund on December 15 or cap it as soon as 350 million accumulated units have been issued and raise the annual charge from 1.5 per cent to 1.75 per cent on February 1. The fund is top out of 46 over five years, returning 199.3 per cent compared with a 96.3 per cent sector average.

Bestinvest head of communications Justin Modray says: “Dan Nickols is an excellent manager but past outperformance does not guarantee future performance. Hard-capping is sensible but to ratchet up the AMC smacks of greed.”

Chelsea Financial Services managing director Darius McDermott says: “We applaud the decision to hard-cap it but think it is an error and cheeky to increase the AMC.”

Old Mutual Asset Management head of marketing Simon Wilson says: “Fund performance will be restricted if it is allowed to grow unchecked so we think a 25 basis points’ rise is a fair balance between maintaining access to an unrestricted fund performance and our prospective loss of business due to the introduction of a limit on units of issue.”

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