investors switch on to clean funds

There was a 268% increase in clean fund sales in March as investors sought to avoid new fund charges and make last minute ISA investments, according to TD Direct Investing.

investors switch on to clean funds

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The execution-only brokers said that there had been an almost two-fold increase in the number of clean funds on its platform, and uptake was starting to increase as investors became more familiar with the concept.

The most popular fund during the month was the Aberdeen Emerging Markets Fund, probably due to its introduction of an initial charge at the beginning of April, while its clean share class fund scooped eighth place.

The fund has outperformed its sector since the end of last year, as shown in the graph.

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First State Global Emerging Markets Leaders, meanwhile, took second place while its clean equivalent was the 12th most bought fund during the month.

Following the announcement by HMRC that trail commissions would be subject to tax from the start of the 2014/15 tax year, a number of fund managers announced that they would be introducing clean share classes to their ranges.

Standard Life is removing the rebate mechanism altogether from its platform and aims to have the process completed by the end of the 2013/14 tax year.

Skandia, meanwhile, said that it would add clean fee share classes to its platform but will continue to pay a rebate where possible.

Speaking at the time of the announcement, a spokesperson said the firm had already built the unit rebate mechanism into its current model and would be keeping it.