Baillie Gifford slices fees across four trusts after ‘strong growth’

£685m Japan trust among the listed vehicles affected

Baillie Gifford has sliced charges across four of its investment trusts, which have seen “strong asset growth” and increased scale this year.

Edinburgh Worldwide Investment Trust, Pacific Horizon Investment Trust, The Baillie Gifford Japan Trust and Baillie Gifford Shin Nippon will all see their annual management fees fall from 0.95% to 0.75% on the first £50m of net assets.

All four trusts operate on a tiered approach to total assets. Under the revised fee structure this means the charge on the next £200m of net assets will be 0.65% and 0.55% on assets beyond £250m.

The reduction in management fees is expected to save each of the four trusts £100,000 per annum, the Scottish fund group said.

James Budden (pictured), director of retail marketing and distribution at Baillie Gifford, said the latest round of fee reductions shows the firm’s willingness to pass on economies of scale back to investors.

“The fee reduction for these trusts is part of our commitment to offer value for money to investors,” said Budden. “Our trusts have seen strong asset growth and have been busy issuing new equity. We are keen to pass on the benefits of increased scale to shareholders where possible.”

The four trusts selected to get the fee chop have produced strong returns on a net asset value basis over the medium-term with all of them landing in the first quartile against peers in their respective investment trust sectors.

Over the last year however they have been hammered by higher volatility, with the tech-heavy Edinburgh Worldwide Investment Trust and Pacific Horizon Investment Trust particularly suffering during the October sell-off.

Investment TrustMarket ValueNAV 1yrNAV 3yr
Edinburgh Worldwide Investment Trust£460.27m12.9%74%
Pacific Horizon Investment Trust£177.9m-9.3%65.6%
Baillie Gifford Japan Trust£685.56m-3.2%65.1%
Baillie Gifford Shin Nippon£505.46m10%105%
Source: Trustnet

The quartet of trusts are the latest to see their annual management fees lowered.

Last year the Edinburgh-based manager cut the management fee on its £7.1bn Scottish Mortgage trust on a tiered basis after its “milestone” entry into the FTSE 100 index. It also launched a tiered charging structure for its £1.5bn Monks Investment Trust a few weeks later.

The lower annual management fees will come into effect on 1 January 2019.

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