M&G slashes fees with online direct investment service

M&G has unveiled its low-fee online service for investors having first outlined its plans in May last year.

Over 90 per cent of its direct customers will be able to take advantage of lower charges with immediate effect if they switch to the execution-only online service, the fund giant says, although investors who already hold cheaper share classes or invest in passive funds will not benefit from lower fees.

The only fees incurred by investors who use myM&G will be the funds’ ongoing charges figure and transaction fees, with the latter averaging below 0.2 per cent for the equity funds over the past three years.

Direct investors with up to £250,000 who move their account online will qualify for the R Share class, which typically has an OCF of 1.15 per cent per annum among the actively managed equity funds, compared to the OCF of 1.65 per cent for the A share class. Investors in bond funds could see their OCF drop from 1.15 per cent to 0.9 per cent.

This means an investor with £25,000 held in M&G equity funds who switches their account to the online service could save at least £1,250 in fees over 10 years.

Direct investors with £250,000 or more who move their account online can switch to the I share class, which usually carries a fee of 0.9 per cent per annum for an actively managed equity fund, meaning customers could save at least £18,750 in fees over 10 years.

Existing M&G customers will benefit from a heads up from the firm before myM&G is rolled out to new investors.

In February this year M&G became one of the first major UK asset managers to announce it was absorbing its research costs ahead of the new Mifid II rules.

Carole Mott, head of investor services at M&G, says: “We are delighted to be able to offer our customers a more modern digital service, which will allow the great majority to reduce the fund charges they pay when they switch over.”