Franklin UK Equity Income rating upgraded due to slashed fees


The Franklin UK Equity Income has been upgraded by Morningstar from bronze to silver following a significant reduction in fees.

In June, the annual management charge for the £179m UK Equity Income, £22m UK Rising Dividends and £66m UK Opportunities funds dropped from 0.75 per cent to 0.45 per cent. The ongoing charge figure will also be capped at 0.55 per cent.

The Franklin UK Equity Income fund is now one of the cheapest offerings in the Morningstar UK equity income category.

Manager research analyst at Morningstar Samuel Meakin says: “The magnitude of the reduction now sets this fund apart from its peers in terms of costs.”

“We have long highlighted the predictive power of fund fees and their impact on performance outcomes, with our studies demonstrating how dependable fees are as a predictor of future success.”

A report released by Morningstar in May found the cheapest US equity funds succeeded three times as often as the highest-cost funds.

Meakin says the ratings agency already had a positive view of fund manager Colin Morton and the UK equity team at Franklin.

“This move serves to increase our conviction in the longer-term prospects of the UK Equity Income fund, given the tailwind that a reduction in fees will provide to investor net returns going forward.”

Last week, Morningstar announced it was upgrading the Woodford Equity Income fund in part due to transparency around its fee structure.