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Old Mutual to merge funds and raise fees

Old Mutual Asset Managers is to streamline its fund range in a move that will see charges rise on some products and its managers given the ability to adopt Ucits III powers.

The company is planning to convert its unit trust into Oeics in September and use the opportunity to amalgamate six funds that are either uneconomic or duplicated with others in its range.

The Old Mutual £23m UK select large cap and £28m UK equity funds will be absorbed by the £77m UK select equity fund while the £41m worldwide select equity and £2m global technology funds are to be rolled into the £12m global equity fund and the £27m US select equity fund is to be merged into the £150m North American equity fund.

The £28.8m pooled pension fund will be amalgamated into the £130m select managed fund of funds vehicle.

Annual management charges will be raised on four funds. Investors in the global, European and UK equity funds will see charges rise from 1 per cent to 1.5 per cent, with charges for investors in the UK select large-cap fund increasing from 1.25 per cent to1.5 per cent.

Although the increases may look steep, Old Mutual marketing director Simon Wilson says this brings them in line with the industry average. He insists the funds’ new ability to use Ucits III powers, such as buying derivatives, will be phased in gradually, with only three fixed-interest and the UK equity income funds able to adopt them immediately.

Wilson says: “The pricing has been changed on some funds to adjust a previous anomaly. The Ucits III powers will be used when appropriate and their introduction will be carefully managed.”

Hargreaves Lansdown senior investment manager Ben Yearsley says: “I am all in favour of fund rationalisation as there are too many groups with funds all doing similar things. but they have used this as an opportunity to put up some of the charges.”


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