- Nearly 30 investment trusts have announced fee cuts
- These include a number of trusts run by JPMorgan Asset Management and Abrdn
Thirty one investment trusts have announced a change to their fee structure over the past year and 28 of these will result in a fee reduction, according to the Association of Investment Companies (AIC). Research from Fitz Partners also found fund fees overall had dropped, with two-thirds of products that had changed what they charge in the past year dropping the ongoing charge figure.
Trusts are facing continued pressure to demonstrate value for money given the dominance of the exchange traded fund (ETF) sector. Fees for equity ETFs have fallen consistently, now sitting at an average of 0.2 per cent. Fixed income ETFs have a similar average fee level, while commodity ETFs have fees more in line with investment trusts, as per JPMorgan data.
But AIC data shows improvement in the active sector.
Four JPMorgan Asset Management-managed trusts are reducing fees, including UK equity income fund JPMorgan Claverhouse Investment Trust (JCH). Since 1 July, it has charged an investment management fee at an annual rate of 0.45 per cent on the first £400mn of its net assets and 0.40 per cent of net assets above that amount. Previously, the trust charged 0.55 per cent on the first £400mn of its assets and 0.40 per cent on assets in excess of £400mn.
In July, JPMorgan Emerging Markets Investment Trust (JMG) changed from having a flat fee of 0.75 per cent a year on its net assets to charging 0.75 per cent a year on the first £500mn of net assets, 0.65 per cent on net assets between £500mn and £1bn, and 0.60 per cent on net assets in excess of £1bn.
Asia Dragon Trust’s (DGN) imminent merger with Abrdn New Dawn Investment Trust (ABD), meanwhile, will bring in a drop from 0.85 per cent on the first £350mn of its net assets to 0.75 per cent, while assets above that value will continue to be charged at 0.5 per cent.
Three other abrdn-managed trusts – Abrdn New India Investment Trust (ANII), Abrdn UK Smaller Companies Growth Trust (AUSC) and Abrdn Property Income Trust (API) – have cut their fees over the past year. Two other property funds – Tritax EuroBox (BOXE) and Urban Logistics REIT (SHED) – have also announced fee cuts.
Other non equity trusts which have amended their fees include CVC Income & Growth (CVCG) which has scrapped its performance fee as of the start of this year.
In 2022, 27 investment companies made fee changes to the benefit of shareholders and in 2021 30 investment companies reduced fees. “Investment trust boards in recent years have been proactive and creative in looking for ways to deliver shareholder value, and this year in challenging market conditions the pace has stepped up,” says Annabel Brodie-Smith, communications director of the AIC. “The total number of fee changes so far in 2023 is 28 - similar to the number of fee changes for the whole of 2021 and 2022.”
Fitz Partners did flag some fee increases in a report last week, although not for retail investors. "Institutional share classes, which would be the most competitive when it comes to pricing, having the largest proportionate increase in equity funds [ongoing charges] at 9 per cent," said Fitz chief executive Hugues Gillibert.
