Guinness Asset Management is making its Z share class – with an AMC of 0.25 per cent and a maximum TER of 0.74 per cent – available to investors in its Global Equity Income Fund.
Tim Guinness (pictured), chief executive and manager of the USD280m Guinness Global Energy Fund, says: "I believe strongly in charging fairly for managing investments and that is what we are setting out to do. It saddens me to see that the City I remember has changed and that fees for raising capital or managing investments have risen to such an extent over recent years.
"We’ve researched fund costs in both the IMA Global Equity Income and the global income ETF arenas, and we think this book build proposition offers attractive value to investors."
The firm’s analysis of the IMA Global Equity Income sector shows that the current median TER is 1.57 per cent, with a range of 0.75 per cent to 1.99 per cent. Guinness Global Equity Income Fund’s Z class TER of 0.74 per cent therefore makes it the cheapest share class available in the sector.
Similarly, analysis of Global Income ETFs (listed in Financial Express) shows the median TER at 0.58 per cent per annum, the average at 0.60 per cent, with a range of 0.46 per cent to 1.14 per cent.
There is a similarly wide range in performance. From 31 December 2010, the best performing ETF is up 7.66 per cent, while the worst is down 11.12 per cent (in GBP, total return to 6 November 2012). On the same basis, based on the actual return of its 1.5 per cent AMC GBP share class adjusted for fees, Guinness Global Equity Income Z class would have returned 10.7 per cent.
The volatility range amongst the ETFs is 11.62 per cent to 21.32 per cent, against which the Guinness Fund comes in relatively low at 12.78 per cent.
Guinness Global Equity Income’s Z class return of 10.7 per cent since launch (based on the 8.4 per cent return of its 1.5 per cent AMC GBP class and adjusted for fees) is 6.0 per cent above its MSCI World Index benchmark. Its first year yield was 3.5 per cent.
"We don’t chase yield, we want steady capital and dividend growth," says co-manager Matthew Page. "We invest in companies that offer reliable and growing dividends at valuations that offer the potential for long-term capital growth, which is particularly attractive in the current uncertain economic climate."
The current intention is that the ‘Z’ share class offer will soft close once the fund, currently USD25m in size, reaches a size of GBP100m, although it will remain open to charity clients.
Guinness Asset Management launched its clean-fee share class (X class) for all seven of its Dublin OEIC sub funds in March, with an AMC of 0.75 per cent.