Royal London Asset Management’s changes to its charging structure have been described as less radical than Fidelity International’s introduction of fulcrum fees and unlikely to influence fund buyer decisions.
From 3 June, the asset manager will move to a single fixed charge named the “fund management fee” or FMF and drop its ongoing charge. Assets under management and future expectations of costs for funds informs the FMF rate.
In a press release published on Friday morning, RLAM said the new fee would be clearer and simpler for investors to understand, unlike the OCF, which can vary month to month.
However, it admitted most funds would see a slight increase in cost. The change applies to RLAM’s multi-asset, equity and bond unit trusts. Transaction costs will be disclosed separately.
In total, around 30 funds will become more expensive for investors. Among the handful of funds that become cheaper, Royal London International Government Bond enjoys the biggest price cut, falling 19 basis points to 0.30%. The European Corporate Bond falls 10bps to 0.30%. Most of the other fee changes were no larger than plus or minus three basis points.
Fidelity fee changes have failed to shape flows
Fidelity delivered a much more radical approach to fee structures when it adopted a sliding fulcrum fee, said Tilney managing director Jason Hollands. Even still, Hollands said the evidence there is that it has had very little impact on buyer behaviour.
He added: “I think most advisers will judge this on a product by product basis and ask themselves whether the costs appear reasonable for the performance being delivered compared to rival products elsewhere. I don’t see slight nuances in calculation methodology driving the thinking of fund selectors in itself.”
Simplicity should be welcomed
Chelsea Financial Services managing director Darius McDermott welcomed the simplification of the fee structure. “Where fees are going down is to be applauded and where they haven’t managed to lower them that’s obviously a shame,” McDermott said.
Dropping funds’ OCFs for simpler structures could be the direction of travel, he said.
RLAM chief distribution officer Rob Williams (pictured) said: “Our customers want a better understanding of the cost of managing their funds, and the new fixed Fund Management Fee does that – it provides them with both clarity and certainty. We will continue to monitor the fee levels to ensure our funds remain competitively priced while still providing excellent value for money.”
Royal London Bond Funds ICVC
Fund Name and Relevant Share Class | Current OCF | Fund Management Fee | |
Royal London Cash Plus Fund | |||
Class M | 0.27% | 0.25% | |
Royal London Short-Term Money Market Fund | |||
Class Y | 0.09% | 0.10% | |
Royal London Corporate Bond Fund | |||
Class M | 0.53% | 0.56% | |
Royal London Duration Hedged Credit Fund | |||
Class Z | 0.55% | 0.56% | |
Royal London Enhanced Cash Plus Fund | |||
Class Y | 0.17% | 0.18% | |
Royal London Ethical Bond Fund | |||
Class M | 0.54% | 0.55% | |
Royal London European Corporate Bond Fund | |||
Class Z | 0.40% | 0.30% | |
Royal London Global Index Linked Fund | |||
Class M | 0.50% | 0.50% | |
Royal London Index Linked Fund | |||
Class M | 0.32% | 0.36% | |
Royal London International Government Bond Fund | |||
Class M | 0.49% | 0.30% | |
Royal London Investment Grade Short Dated Credit Fund | |||
Class Z | 0.23% | 0.24% | |
Royal London Cautious Managed Fund | |||
Class A | 0.69% | 0.70% | |
Royal London Short Duration Credit Fund | |||
Class M | 0.33% | 0.35% | |
Royal London Short Duration Gilts Fund | |||
Class M | 0.29% | 0.29% | |
Royal London Short Duration Global Index Linked Fund | |||
Class M | 0.26% | 0.27% | |
Royal London Sterling Credit Fund | |||
Class M | 0.50% | 0.53% | |
Royal London UK Government Bond Fund | |||
Class M | 0.44% | 0.45% |
Royal London Bond Funds II ICVC
Fund Name and Relevant Share Class | Current OCF | Fund Management Fee | |
Royal London Ethical Bond Fund II | |||
Class M | 0.54% | 0.55% | |
Royal London Short Duration Credit Fund II | |||
Class M | 0.33% | 0.35% |
Royal London Equity Funds ICVC
Fund Name and Relevant Share Class | Current OCF | Fund Management Fee | |
Royal London FTSE 350 Tracker Fund | |||
Class Z | 0.12% | 0.13% | |
Royal London Emerging Markets ESG Leaders Equity Tracker Fund | |||
Class Z | 0.30% | 0.35% | |
Royal London UK Equity Income Fund | |||
Class M | 0.68% | 0.72% | |
Royal London European Opportunities Fund | |||
Class M | 0.73% | 0.75% | |
Royal London European Growth Fund | |||
Class M | 0.65% | 0.70% | |
Royal London Europe ex UK Tracker Fund | |||
Class Z | 0.23% | 0.25% | |
Royal London Asia Pacific ex Japan Tracker Fund | |||
Class Z | 0.26% | 0.30% | |
Royal London Global Equity Diversified Fund | |||
Class M | 0.38% | 0.41% | |
Royal London Global Equity Select Fund | |||
Class M | 0.67% | 0.71% | |
Royal London Japan Tracker Fund | |||
Class Z | 0.24% | 0.25% | |
Royal London UK Mid Cap Growth Fund | |||
Class M | 0.75% | 0.77% | |
Royal London UK All Share Tracker Fund | |||
Class Z | 0.14% | 0.15% | |
Royal London UK Equity Fund | |||
Class M | 0.65% | 0.67% | |
Royal London UK Dividend Growth Fund | |||
Class M | 0.65% | 0.71% | |
Royal London UK Smaller Companies Fund | |||
Class M | 0.72% | 0.77% | |
Royal London UK Opportunities Fund | |||
Class M | 0.72% | 0.77% | |
Royal London US Tracker Fund | |||
Class Z | 0.23% | 0.25% |
Royal London Multi Asset Funds ICVC
Fund Name and Relevant Share Class | Current OCF | Fund Management Fee | |
Royal London GMAP Adventurous Fund | |||
Class M | 0.60% | 0.60% | |
Royal London GMAP Balanced Fund | |||
Class M | 0.65% | 0.60% | |
Royal London GMAP Conservative Fund | |||
Class M | 0.65% | 0.60% | |
Royal London GMAP Defensive Fund | |||
Class M | 0.60% | 0.60% | |
Royal London GMAP Dynamic Fund | |||
Class M | 0.62% | 0.60% | |
Royal London GMAP Growth Fund | |||
Class M | 0.62% | 0.60% | |
Royal London Monthly Income Bond | |||
Class M | 0.55% | 0.55% | |
Royal London Multi Asset Strategies Fund | |||
Class M | 0.55% | 0.55% |