Columbia Threadneedle’s fund board has identified a small number of funds delivered “poor value” for performance last year, as well as 55 share classes that were more expensive when compared with the wider market.
The fund group is the latest to reveal its value for money assessment under new regulatory requirements rolled out by the Financial Conduct Authority last year.
The report considers Columbia Threadneedle’s 57-strong UK fund range and 435 share classes across seven different criteria set by the FCA including quality of service, economies of scale and AFM costs.
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On performance the fund board awarded the asset manager two and a half out of a potential four stars or “moderate to good”.
“We have reviewed the performance of the funds and share classes and are pleased to report that overall performance is on an improving trend, with particularly strong 12-month relative returns across the range,” the fund board said.
“However, we have identified areas of poor value on a small number of funds and have put remedies in place, through escalation to Threadneedle Asset Management Ltd (TAML).
“We have impressed on TAML that improvements in performance are expected for these funds/share classes.”
Threadneedle High Yield Bond and Global Equity among consistent laggards
Of Columbia Threadneedle’s 57 funds, 29 have outperformed their benchmarks over one and three years, including the Pan European Focus and UK Smaller Companies funds.
The fund board said that a further 10 had shown improvement in the last year including the Threadneedle Global Emerging Markets fund, which was up 11% on its benchmark.
But thirteen of its funds lagged their benchmarks over both time frames.
On the fixed income side, the £739.5m Threadneedle High Yield Bond fund and £489.8m Sterling Bond fund both fell short of their benchmarks. Among its equity strategies, its UK Select and US Equity Income funds were among the weaker links.
The worst performer, the Threadneedle Global Equity Income fund, scored two stars for performance value. Managed by Jonathan Crown the £216.3m fund was down 3% against its benchmark the MSCI ACWI over one year and down 4% over three years.
Board identifies 55 share classes as ‘poor value’
Compared with the rest of the market Columbia Threadneedle’s fund board said it delivered “good value” on costs and charges across share classes, awarding it three out of four stars.
However, it identified 55 out of 435 share classes, where fees were above the market, as providing “poor value” for retail and institutional investors. This included non-clean retail share classes in its £2.0bn Threadneedle American fund and £456.8m Threadneedle Global Bond which will see their annual management charges cut by 10bps to 140bps and 25bps to 100bps come September.
Following the board’s review Columbia Threadneedle has also reduced registrar fees on 26 share classes on some of its largest funds, including the Threadneedle UK Authorised Property Trust, the feeder fund of its frozen £1.1bn property fund.
Columbia Threadneedle said it will also be moving all of its 30,000 non-advised D2C retail customers into the lowest cost share classes by May 2020 and would apply fee caps to 32 share classes.
At the start of the year the fund group scrapped performance fees across its £34.7bn Oeic range.
> See also: Performance fees face £25bn shake-up from value for money
