From 1st January 2020 we and FundRock Partners Limited (the operator of the Fund) will be making some important changes to the way we levy charges on the FP WHEB Sustainability Fund (“the Fund”). We believe that these changes are in the best interests of our customers as they improve clarity and predictability of the impact of charges on their investment. All the changes are explained in a letter to investors, which is also available on this link.
The main change we are making is to introduce a single, fixed rate “Management Fee” which will replace all of the costs and charges that are currently included in the ongoing charges figure (or “OCF”) of the Fund. As a result, various costs and charges associated with services to the Fund such as depository and custody, transfer agency, legal, audit and fund accounting charges will be paid out of the single, fixed rate Management Fee.
These fees are currently paid as separate costs for the Fund and some of them may vary. By replacing these with the Management Fee, we believe we will provide greater certainty and clarity of costs for investors by providing a single annual fee that is set at a fixed rate. Investors will not pay any additional charges nor will there be any increase in the existing level of fees being charged as a result of this change. The only costs that will continue to be paid separately by the Fund are those which are not typically included in the OCF of the fund such as transaction and borrowing costs.
The Financial Conduct Authority (“FCA”), the body that regulates WHEB and the Fund, recently published the findings of its study of the investment market. One of the FCA’s recommendations is that market-standard charging practices could be clearer and more transparent for investors. We agree and this is why we have decided to change the way that we charge for managing the Fund by implementing a single all-in management fee to make the overall costs of investing in the Fund easier to understand and more predictable for investors. We believe that this is the logical next step towards better aligning the interests of investment managers with their investors, following on from the improvements made to charging structures as a part of the Retail Distribution Review at the end of 2012, and the changes made to enhance transparency in relation to payments for investment research with the introduction of the MIFID II regulations in 2018.
WHEB isn’t the first to make such a change but is certainly an early adopter. We expect that over time the rest of the industry will follow suit.