BlackRock to introduce tiered pricing for UK retail funds with at least £1bn AUM
'BlackRock believes that tiered pricing represents an appropriate way to share further scale benefits on eligible BFM funds to UK retail investors.'
The move, which the company committed to in its assessment of value report in October 2022, will be effective from 6 October 2023, but will only apply to strategies with at least £1bn in assets under management.
The base annual management charge (AMC) for funds under the £1bn threshold will be 75bps, with a discount applied progressively as AUM grows.
A 5% discount will be applied to funds with AUM between £1bn and £3bn, bringing the AMC to 71.25bps. Consequently, funds with AUM between £3bn and £5bn will see a 7% discount to 69.75bps, while those with AUM over £5bn will have an 8% discount applied with an AMC of 69bps.
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In the letter, BlackRock explained the discount will only apply to the fund's total net asset value that «falls within the ranges», meaning that only the proportion of NAV above £1bn and/or within the other categories will receive the respective discount.
However, if a fund's AUM falls below the £1bn threshold, the tiered pricing will be paused and then reinstated only when, or if, its assets grow above that limit.
The asset manager said it «reserved the right» to change the ranges at which discounts apply, or change the discount applied for any given band, as they may also vary according to unit classes.
The 41 funds in question belong to seven ranges, namely the BlackRock Absolute funds, Charities funds, Collective Investment funds, Institutional Bond fund, Investment funds, Authorised Unit funds and Authorised Unit trusts.
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