Canada Life Asset Management has slashed charges across £790m worth of bond funds in a move which commentators say brings them in line with competitors but fails to stack up to popular rivals in certain corporate bond sectors.
The reductions, which take effect on 25 June, will see the annual management charge (AMC) on the accumulation and income C share classes of four fixed income funds reduced by up to 40%.
Its flagship Canlife Global Macro Bond, managed by David Arnaud and Kshitij Sinha, will see its AMC cut from 0.75% to 0.50%.
The £185.1m Canlife Short Duration Corporate Bond and £96.8m Canlife UK Government Bond funds are set to see the biggest discount to their annual charge, which will fall from 0.50% to 0.30%.
David Marchant (pictured), CIO of Canada Life and managing director of Canada Life Asset Management, said the changes would ensure the fund group continues “to deliver excellent value for money to customers”.
| Fund | Previous AMC | New AMC |
| LF Canlife Global Macro Bond fund | 0.75% | 0.50% |
| LF Canlife Short Duration Corporate Bond fund | 0.50% | 0.30% |
| LF Canlife Corporate Bond fund | 0.50% | 0.40% |
| LF Canlife UK Government Bond fund | 0.50% | 0.30% |
Source: Canada Life AM
Alternatives from Artemis and Twentyfour more competitive on corporate bond charges
Independent wealth expert Adrian Lowcock said the fee cuts do bring the bond range in line with competitors and “in some instances the new pricing looks attractive”.
AJ Bell active head of portfolio Ryan Hughes said the fee cuts “while welcome” don’t go far enough to stack up with the “leading players”, particularly in the corporate bond and short duration sectors.
“In UK corporate bonds, the likes of Artemis and Twentyfour, both highly regarded, are notably cheaper at 0.40% OCF or less,” Hughes noted, “while in short duration corporate bonds, Fidelity and Royal London are significantly cheaper even after the cut at 0.24% OCF compared to 0.38% OCF from Canada Life.”
“In addition, passive fixed interest remains significantly cheaper for those happy with ETF exposure and this is creating a high bar for active managers to compete when the expected returns from fixed interest remain low,” he added.
Investors flock to Canlife Short Duration Corporate Bond amid rising yields
Canada Life said its Canlife Short Duration Corporate Bond fund had seen a boost in net inflows “as investors seek ways to navigate potential rises in yields and interest rates”.
According to Morningstar estimates, it has seen the highest net inflows of the four funds year-to-date with investors pouring in £8.5m, including £7.1m in April alone. Canlife Global Macro Bond is not far behind, having attracted £8.3m during the first five months of the year.
But Canlife Corporate Bond and Canlife UK Government Bond have endured a bumpier ride with the former bringing in £1.9m after factoring in three months of net outflows and the latter racking up £4.5m in redemptions for the last five months.
