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Smaller funds hit by Cofunds’ rise in charges

Cofunds is to increase its charges for fund groups, with smaller funds set to be hit hardest.

Fidelity has also made changes to its charging structure, with fund firms’ annual fees linked to service levels and a new corporate action charge added.

From January, Cofunds will introduce a new fee structure, with all groups paying more for funds on the platform, although smaller firms will be worst affected.

Cofunds says this is the first fee rise since it was set up in 2001 and that the pricing structure will not be changed for three years.

Under the existing annual fee structure, firms are charged a similar amount regardless of asset size and sales. The new tariff takes both into account, so smaller funds will be hit hardest.

The annual price will be calculated from a company’s back book of business on the platform as of December 31 and new sales starting from January 1.

Funds will be placed into one of four pricing tiers, dep­ending on level of sales, with higher sales attracting lower additional percentage fees.

The highest add-on to the annual fee is five basis points. Cofunds refuses to reveal the lowest tier charge but denies there will be a zero level for the biggest and most popular sellers.

Fidelity FundsNetwork is linking annual fees to service levels to encourage groups to provide up-to-date information, such as fund prices. It is also introducing a corporate action charge for activity such as fund mergers, name or AMC changes. It estimates that over 1,000 take place every year. Cofunds already includes this in its tariff.

Skerritt Consultants head of investments Andrew Merricks says: “You would expect these charges to be passed on to the client at some point.”

T Bailey fund manager Jason Britton says: “If platform pricing were to move to a basis that adversely affected boutique fund groups, that could cause a problem for advisers.”

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