FundsNetwork is forcing advisers to remove soft-closed funds from model portfolios as its systems cannot facilitate initial charges.
Following the soft closure of the Aberdeen Emerging Markets fund in April through the addition of a 2 per cent upfront charge, the platform has notified advisers they will have to reallocate weighting in model portfolios into other funds.
FundsNetwork says clients with existing monthly savings plans can continue to hold the fund if it is outside of advisers’ model portfolios.
A FundsNetwork spokeswoman says: “As a result of Aberdeen levying a 2 per cent initial charge on the Emerging Markets Fund to stem flows, FundsNetwork has had to close the fund, excluding existing monthly savings plans, to new investments.
“This has meant advisers who hold the fund within a model portfolio have had to remove the fund and reallocate the weighting assigned to this fund.
“We are looking into a resolution as the soft closure of funds is becoming more frequent.”
The platform could not disclose how much money is held in model portfolios on the platform.
Several funds have announced soft closures in recent months including First State, which is set to soft close its Global Emerging Markets Leaders fund from September by implementing a 4 per cent initial charge.
Capital Ideas chartered financial planner Martin Fishburn says: “This is not an action that should be taken as a result of a platform’s lack of functionality. Fund selection decisions should be driven by appropriate research. FundsNetwork looks less attractive as a result of this.”