The move follows the launch of the new fee structure across five active equity funds from its Luxembourg-domiciled Sicav range.
Investors that purchase the new share class will have access to a 0.10% lower base annual management charge of 0.65%. The share class will also be available on the £2.5bn Fidelity European fund and the £900m Fidelity American fund.
The variable part of the fee will slide plus or minus 0.20% depending on performance. This means the maximum fee will be 0.85% if the fund outperforms or 0.45% should it underperform.
Performance is benchmarked against a pre-defined market index over an annualised three-year rolling period after fees and charges.
Fidelity first announced it would be adopting a variable management fee last October. Initially it planned to offer the fee in lieu of absorbing research costs under Mifid II regulation. However, the firm backtracked on its decision.
Funds adopting fulcrum fee
| Share class |
| Fidelity American Fund W-VMF Accumulation Shares |
| Fidelity Asian Dividend Fund W-VMF Income Shares |
| Fidelity European Fund W-VMF Accumulation Shares |
| Fidelity Global Special Situations Fund W-VMF Accumulation Shares |
| Fidelity Special Situations Fund W-VMF Accumulation Shares |
The Fidelity Special Situations fund managed by Alex Wright (pictured) is the largest of the UK-domiciled funds now available in the variable management fee share class.
Wright’s fund is second quartile over one year and first quartile over three and five years, according to data from Trustnet. Year-to-date it has returned 3.33%, slightly above the IA UK All Companies sector’s return of 3.02%.
In May, Portfolio Adviser reported he was cashing in on Donald Trump’s increase in defense spending and bid to create a more lethal military.
Investment trusts
Three of the asset manager’s trusts, Fidelity Japan Trust (formerly Fidelity Japanese Values), Fidelity Asian Values and Fidelity China Special Situations, have also adopted the fee structure this year. The trio of trusts have over £2bn in assets under management.
Paras Anand, CIO of European equities, said in offering the variable management fee in some of its flagship funds the firm was responding to the growing debate around the value of active fund management.
Over time he said Fidelity plans on expanding the so-called fulcrum fee to the broader fund range.
“The new structure clearly aligns Fidelity’s interests to that of our clients and, unlike other performance fees out there, we will give back during periods of relative underperformance,” said Anand.
“It demonstrates our ongoing commitment to providing the best possible value to our clients and we hope it will incentivise them to stay invested in active strategies over the long term.”
