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Investors still in pre-RDR retail classes could benefit from up to 55 per cent discount by switching to a Clean share class


Research from Fitz Partners based on the latest edition of the “UK Fund Charges” database shows that Clean classes have been providing investors with substantial discounts in OCFs (Ongoing Charges Figure).

The largest average discount is offered by Baillie Gifford. Their investors would benefit on average from a 55 per cent discount on OCFs by investing into their clean classes when compared to the corresponding pre-RDR Retail share class. Although Old Mutual average discount in clean classes OCF comes just below Baillie Gifford at 53 per cent, they deliver the largest drop in their management fee, a 59 per cent reduction from their retail class management fee levels. 
According to Fitz Partners research, the overall average discount on clean classes OCFs, for equity funds domiciled in the UK, stands at 44 per cent.
Hugues Gillibert, Fitz Partners CEO, says: “In the final fund market remedies published by the FCA, it was announced that asset managers will be able to move existing investors from legacy pre-RDR share classes into discounted clean classes and therefore benefit from lower fund fees. On average the discount enjoyed by investors invested into clean classes has been about 44 per cent but as the table below shows, some asset managers have been further discounting their total expenses often by substantially lowering their management fees and keeping other expenses such as administration fees low.
“As Fitz Partners also classifies all share classes for European cross-border funds, we were able to estimate the average level of discount on OCFs for clean classes in Europe as 40 per cent. This level of rebate is slightly lower than what we experience in the UK but we would expect to see this discount grow with the steady increase in the number of further discounted clean classes in Europe, so-called “super-clean” classes.”

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