Investing
Scottish Mortgage investment trust to cut fees to 0.3%
The Scottish Mortgage investment trust, one of the UK’s largest investment companies, is to cut its annual management fee from 0.32% to 0.3%.
The reduction will come into force from 1 April 2014.
Scottish Mortgage, which currently has assets of around £3bn, said it had been able to make the reduction because of its scale.
“Both the Board and Managers are keenly aware that low charges have a major impact on long term returns especially when compounding is taken into account, ” said chairman John Scott.
“Further reductions would be considered if assets continue to grow. The Board considers that the combination of a low fee and a long term global approach makes for a compelling investment proposition.”
With a history dating back to 1909, Scottish Mortgage is one of the UK’s oldest investment trusts.
An investment trust – also referred to as investment company – is listed on the London Stock Exchange and invests shareholder money in the shares of other companies.
Historically, investment trusts were cheaper than their open-ended rivals because they did not pay commission to advisers.
However, since commission was abolished for open-ended funds in January 2013 a number of investment trusts have reduced their fees to compete with open-ended funds.
To complement this there is also a clear trend for investment trusts to abolish performance fees, according to the Association of Investment Companies.
