Skandia has reversed its decision to automatically switch life clients currently invested in the Skandia Invesco Perpetual Income Fund into a newly created OMW Old Mutual Woodford Equity Income Fund.
According to a statement from Skandia on Friday morning, “Many financial advisers have told Skandia that they want to remain invested in the Invesco Perpetual funds and asked that the funds remain open.”
Paul Feeney, Old Mutual Wealth, CEO said by way of explanation: “What can I say, but ‘we listened’? What we heard from advisers and their customers was that they welcomed the addition of the Woodford Income fund to our life range and the price we have negotiated for them, but they wanted the Invesco Perpetual funds to remain open. We have acted to keep those funds open at a reduced cost.”
According to Skandia, the original decision, announced on 22 August, was taken because of the ”unprecedented demand” for access to the recently launched vehicle managed by Neil Woodford – demand that it expected to continue for some time.
“To meet this need, and to avoid a situation where only a very few Skandia investors remain in the current Skandia Invesco Perpetual Income Fund – which could result in an increase in costs for these investors – we have therefore taken the decision to move all holdings in that fund back under the management of Neil Woodford,” the group said in a letter to clients.
Skandia has now backtracked on that, saying: “Skandia is now confident that the TERs of the funds are stable and, furthermore, has been able to reduce the TERs of the Skandia Invesco Perpetual Income and High Income funds to 1.2% (from their current 1.3%) and cap them at that level.” But, Skandia added, that the reduction and cap on the TER applies only to the Skandia Life funds, not the underlying Invesco Perpetual funds.
Given those changes, Skandia said it is now able to keep both funds open to life clients and will not transfer the assets from the Invesco fund to the Woodford one.
Skandia said the newly created OMW Old Mutual Woodford Income Fund will be added to the Skandia Life range at the originally agreed 1.1% TER and will open in October.
“Craig Newman, chief executive, Woodford Investment Management, says: “We empathise with the predicament faced by financial advisers and, of course, support their desire for choice and control. We have an excellent relationship with Skandia and look forward to working with them in the years ahead.”
In unrelated news, Woodford Investment Management has confirmed that Russell Harrop has left the firm after the conclusion of his four month countract.
