BlackRock tiered fund pricing structure divides opinion
'Active managers as yet have not truly grasped the nettle that the cost of investing in active funds is still too high.'
The model is based on specific assets under management thresholds relative to each fund, with investors receiving discounts only after the AUM surpasses those limits. When the pricing was revealed last week, none of the 41 funds qualified for tiered pricing.
Analysts told Investment Week the move to share economies of scale and value with investors was a welcome one, given the recent implementation of the Consumer Duty and the warning from the Financial Conduct Authority on issues with assessment of value reports and the setting of fees.
BlackRock to introduce tiered pricing for UK retail funds with at least £1bn AUM
Ryan Hughes, head of investment partnerships at AJ Bell, said: «It is encouraging to see that in the early weeks on Consumer Duty legislation and in the third year of the assessment of value process that asset managers are looking to finally pass on some of the benefits of the vast economies of scale that their significant asset bases bring.»
Jason Hollands, managing director of Bestinvest, and Rory Maguire, UK managing director of Fundhouse, both echoed Hughes' sentiment, deeming the move a «positive development».
Other asset managers have also sought to differentiate their fee models in the past, Hollands said, noting Fidelity's ‘fulcrum fees', which the company abandoned shortly after launch due to «little traction».
«As a fund gets bigger, fee rates reduce, bringing benefits to all investors in the fund,» he said. «It would not surprise me if we see this start to catch on with other firms.»
While Hollands commended BlackRock's tiered structure for being «relatively
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