rdr driven price cuts commence

State Street Unit Trust Management has slashed prices on its UK authorised tracker funds by as much as 78%, a move it said was made in response to RDR.

rdr driven price cuts commence


While the firm’s parent company State Street Global Advisers is better known for its SPDR ETF range and among institutional investors in the UK, its tracker funds are available on platforms and used within model portfolios.

In a letter to investors State Street said new rules introduced in connection with RDR would affect AMC charges levied within its authorised unit trust range.

“RDR has been introduced by the FSA to increase fee transparency and to protect retail investors,” it said in the letter, adding that its cost reductions would become effective from 31 December – RDR D-day.

The biggest price reduction will affect its UK Equity Tracker Fund, which will see a 78% decrease from its current AMC of 70bps to 15bps.
Next in line is its North America Equity Tracker Fund, which will see charges fall 77% from 90bps to 20bps.

The firm’s Europe ex-UK Equity Tracker Fund’s AMC will drop to 25bps from 90bps currently, and its Japan Equity Tracker and Asia Pacific Equity Tracker funds will both see decreases of 60bps from 90bps to 30bps.

A source familiar with the situation said State Street had needed to alter the share class prices for its tracker funds for some time “in order to be competitive”. He explained the old high-fee and high-rebate model was no longer applicable or competitive and if the company wanted to be included in DFM model portfolios it would have to make changes.

“They flip-flopped in the last few months between issuing a new RDR-ready share class and just cutting their fees to a sensible level. In the end they just cut their fees,” he said.

State Street declined to comment.


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