Baillie Gifford lowers active management fees after watchdog places pressure on the industry

Lucy White
Views Of Edinburgh Castle
Edinburgh-based Baillie Gifford has reduced the management fees on its European and Japanese funds (Source: Getty)

Investment manager Baillie Gifford has reduced the management fees across a range of its UK funds, aiming to offer investors value for money across active management strategies.

The announcement comes as asset managers are under scrutiny from the Financial Conduct Authority (FCA), which published a report on the industry earlier this year. It advocated increased transparency of fee structures, and denounced active fund managers who did not produce markedly different returns to the much cheaper passive tracker funds.

Moody's even predicted that the pressure placed on active managers could squeeze profit margins, as more investors turn to passive funds.

Read more: Financial watchdog's push for reform of the £7 trillion asset management industry could sideline active funds

“Active managers should take the initiative in today’s environment. Value for money is an often neglected element of the fund buying process,” said Andrew Telfer, joint senior partner at Baillie Gifford.

“Investors should be able to choose between passive and attractively priced active funds alongside considering the quality and future capability of active funds to deliver after-fees outperformance.”

Read more: The great Active vs Passive debate: Which is the safer fund management during these uncertain times?

The firm has reduced the management fees on its European fund from 0.65 to 0.55 per cent, and from 0.65 to 0.6 per cent on its Japanese fund.

In January it also dropped the annual management fee for the Baillie Gifford American Fund from 0.65 to 0.5 per cent.

Telfer said:

All active funds are not the same. Sharing economies of scale with investors as funds grow is one way in which Baillie Gifford looks to deliver ongoing value for clients. Meeting all research costs internally is another.

We believe that keeping costs low, maintaining high active share and low turnover and engaging with the management of companies in which we invest are key ingredients of a successful active manager.

Read more: FCA asks some of the UK's biggest asset managers for their Brexit contingency plans

Related articles