Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a711203

'Don't give away alpha': Fidelity stands firm on fund pricing

by Robert St George on Oct 22, 2013 at 07:42

'Don't give away alpha': Fidelity stands firm on fund pricing

Fidelity Worldwide Investment will not be cowed into slashing its fund prices to secure preferential treatment from other platforms, according to Hugh Mullan, the group’s UK managing director.

Fidelity has not been one of the eight asset managersOld Mutual, Cazenove, Schroders, Henderson, Threadneedle, Neptune, Investec and Standard Life Investments – to declare that they will offer ‘super clean’ share classes to Standard Life’s distribution platform.

While Fidelity is seeking access to the same terms for its own platform, Mullan (pictured) is also responsible for Fidelity’s own suite of funds and he is conscious of the need to protect margins on them.

‘I don’t want to give away the managers’ quality and Fidelity’s depth of expertise,’ he told Wealth Manager. ‘I don’t want a commoditised product.’

While Fidelity offers relatively niche funds from star managers such as Citywire AAA-rated Alex Wright, it also has multi-billion-pound core products headed by the likes of Ian Spreadbury in more keenly priced sectors.

Mullan confirmed that he had no interest in racing to the bottom of the pricing spectrum with such funds. ‘Ian Spreadbury is a very high quality manager and we shouldn’t treat him as a commodity,’ he commented. ‘If it’s just a price-based discussion, people will fail to see the value. We would encourage people not to give away alpha.’

Equally, Mullan was sanguine about the prospect of this stance risking Fidelity’s products being excluded from other platforms. ‘We’re comfortable if the funds don’t end up in some of the restricted ranges from distributors,’ he stated. ‘You have to have confidence in your own product.’

On the subject of platforms, Mullan argued that while the pressures on asset managers to lower prices may be beneficial to fund buyers, the same forces are handing platforms too much control over the industry.

Cofunds recently became the latest to write to fund groups to demand access to whatever fee deals they struck with other platforms.

Mullan appreciated the advantages such moves wrought insofar as they lowered costs, but expressed concern about the implications of the trend. ‘It may be uncompetitive if it concentrates power with distributors,’ he explained.

Sign in / register to view full article on one page

3 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Oct 22, 2013 at 13:21

So your fund range will not be downgraded but everyone elses will be upgraded.

report this

Badger

Oct 22, 2013 at 13:57

So you want cheaper from Standard Life but they cant have the same from you!!!!!

I can bet what the answer will be. Just get on with it. Naïve me thinks

report this

banjofred

Nov 01, 2013 at 07:42

So are Fidelity producing results streets ahead of everyone else? He mentions quality which I define as making me shed loads of money. Make lots and charge the fees but charges the fees and just mirror the market and you are taking the pee. If a fund is not performing for me I sell out pretty quickly. I have some fidelity global enhanced inc which is doing OK at present .come January if they don't giveHL the terms to pass me ole charges I will simply move to a firm that does.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

The Citywire guide to investment trusts

Investment trusts have proved to be a highly effective way to invest in the market. Citywire has interviewed the experts to find out more.

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

More about this:

Look up the funds

  • Schroder UK Alpha Plus A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity South East Asia A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Fidelity China Special (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Alex Wright
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ian Spreadbury
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Richard Buxton
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Anthony Bolton
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Allan Liu
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet