Fidelity China Special Situations Investment Trust (FCSS) is lowering its annual management fee (AMC) from 1.5 to 1.2 per cent from 1 April. The investment trust, run by veteran fund manager Anthony Bolton, currently has a charge (the AMC plus other costs of running the fund) of 1.7 per cent, which should fall as a result of the move. Fidelity says that based on last year's expenses, had the AMC been 1.2 per cent, the ongoing charge would have been 1.4 per cent.
"To date, it has usually - though not always - been the case that investment trusts have been cheaper than their open-ended peers on a cost basis, not least because of the lack of trail commission paid to advisers," commented Jackie Beard, director of closed-end fund research at Morningstar. "In this respect, Fidelity China Special Situations has differed from its investment trust peers, as Fidelity pays 0.5 per cent trail commission to advisers who put their clients into this fund. The reduction of the fund's annual management fee by 30 basis points to 1.2 per cent is a step in the right direction. The fund still carries a performance fee, but in reality this has yet to have an impact as the fund has underperformed its MSCI China benchmark since its launch in 2010. Nonetheless, the reduction in AMC makes the fund more competitive in relation to its category peers and shareholders will undoubtedly benefit.
Meanwhile, Baillie Gifford has announced a fee cut on four of its investment trusts, also from 1 April. These are Pacific Horizon (PHI), Edinburgh Worldwide (EWI), IC Top 100 Fund Baillie Gifford Japan Trust (BGFD) and Baillie Gifford Shin Nippon (BGS).
The tiered fee structure is based on net assets and levied at each quarter-end. The trusts will be charged an annual fee of 0.95 per cent on the first £50m, reflecting the cost of managing an investment trust, and 0.65 per cent on assets above £50m.
| Investment trust | Current ongoing charge (%) | 1-year cumulative share price return (%) | 3-year cumulative share price return (%) | 5-year cumulative share price return (%) | Discount/premium to NAV (%) |
Baillie Gifford Shin Nippon | 1.51 | 38.93 | 61.35 | 93.27 | +4.21 |
Edinburgh Worldwide | 1.02 | 8.69 | 22.59 | 46.78 | -11.23 |
Baillie Gifford Japan | 1.2 | 28.17 | 37.32 | 71.02 | +1.48 |
Pacific Horizon | 1.25 | 5.49 | 15.75 | 42.84 | -11.26 |
Fidelity China Special Situations | 1.7 | 7.61 | NA | NA | -1.61 |
Source: Morningstar. Performance data as at 18 March 2013.
