Fidelity Slashes Index Fund Charges In UK As Price War Mounts

Mark Shapland

28 May 2014

Fund manager has stepped up the pressure on its competitors by knocking a fifth off its tracker fund fees - making it the cheapest provider in the UK.

Fees on its seven-strong range are now as low as 0.07 per cent a year on its UK tracker fund and 0.08 per cent on its US fund. Meanwhile its Japan and Europe trackers have been cut to 0.10 per cent, while its Asia tracker is priced at 0.13 per cent. For each tracker Fidelity has cut the charge by around a fifth.

The move dramatically undercuts BlackRock, Vanguard and Legal & General who charge in the region of 0.15-0.17 per cent and well below trackers such as the Virgin FTSE All-Share which are as expensive as 1 per cent a year.

In the UK's new regulatory landscape, asset managers are having to be more transparent about their fees and charging structures, while the widespread use of tracker funds and vehicles such as exchange traded funds is also exerting downward pressure, so some argue, on charges.

Investors are starting to favour trackers as a way to gain access to global markets. About £76 billion ($127.2 billion) was invested in tracker funds at the end of March, representing nearly 10 per cent of total assets under management in funds for UK retail investors.

“Index trackers sit at the core of many investment portfolios and while charges have come down over time, there are still many that are poor value for investors – in fact there is £7 billion of investors’ money still sitting in funds that charge 1 per cent or more,” said John Clougherty, head of UK retail at Fidelity Worldwide Investment.