Will Kames’ move to cut fund fees start a new trend?

Scissors-Cut-Tailor-Measure-Measurement-700.jpgKames Capital has reduced the fees on its UK equity fund from 0.75 per cent to 0.60 per cent.

The £269.3m Kames UK Equity fund, which is managed by Stephen Adams and Philip Haworth, saw the annual charges reduced following a review, with the new charges bringing it in line with its competitors.

Kames Capital director of wholesale Steve Kenny says: “We regularly review our funds to ensure they remain competitive in the wider market and that our investors receive value for money.

“We believe that the performance of the Kames UK Equity fund, coupled with the experience of its management team and its new competitive charge, makes it an extremely attractive proposition for clients.”

Darius McDermott, managing director at Chelsea Financial, says the move from Kames is “interesting” and unusual as normally firms tend to cut fees on smaller funds to reach “critical mass”.

He says: “[Kames’ fund] is not a small fund, it already has a critical size. Normally, there is a greater trend to cut fund fees whilst they are small. It seems they are putting their head over the parapet.”

There are around 93 UK equity funds with annual management fees lower than 1 per cent, according to FE.

Hargreaves Lansdown senior analyst Laith Khalaf says active managers are following passive managers in cutting their fees, but warns that this process will take a long time to pick up.

Khalaf says: “Index trackers have really led the charge when it comes to cutting fees and active managers slowly look like they may be heading in the right direction, but a big gulf has now opened up between the cost of active and passive funds.

“Over time we would expect fund management costs to come down as the pool of invested assets grows larger, though as yet there have only been baby steps taken.”