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Several manufacturers have recently reduced the cost of their funds

by

Alain Thériault

August 2, 2018 09:45

Alain Huard

Many of the manufacturers of mutual funds and exchange-traded funds have reduced their fees since the beginning of the year, particularly in the last few weeks. The trend is growing with the competition and the advisers who set their heart on fund fees.

Like many of the players who had done formerly, Invesco Canada has reduced the fees of many funds. He did it in may for its common fund, and on July 27, for its exchange-traded funds (ETFS). For example, the expenses of the ETF Invesco Low Volatility Portfolio increased from 0,55 % to 0.37 %. Those of the Fundamental High Yield Corporate Bond increased from 0.65 % to 0.55 %.

These reductions occur at the same time that Invesco exchange in Canada, the name of the Powershares ETF to ETF Invesco, and the names of several mutual funds. “We wanted to market our funds under a single brand, explained Alain Huard, vice-president and regional sales director of Invesco. We had about eight different brands, Trimark.

Reduction of costs carried out by the competition

The competition has been the main reason of reduction of costs at Invesco, reveals his vice-president and regional sales director, Alain Huard. He adds that this is the reason number one for all. “We are not different from other sectors of activity. Nobody wants to be the most expensive, otherwise their product will not sell. We try to reduce our operating costs,” he says.

The accelerated passage of the advisors to the fund management fees rather than commission also promotes the discounts, says Mr. Huard. “Because we don’t have to manage the commissions, it is less expensive management for a fund-F-series fund without a commission to which the adviser will negotiate fees with the client), an exchange-traded fund (ETF) or a platform-traded fund (traded on the neo bourse Aequitas). I’m not issuing statements of account for these products.”

Alain Huard has also revealed that mutual funds with deferred sales charge or a reduced fee are only for 11 % of sales of independent advisors who deal with Invesco, as the dollar volume. The 89 % who still fall on the side of the fund to series F, as well as on the side of the funds without entry fees with the commission for follow-up of one-percent. The assets of the fund, F-series has accounted for 69 % of the assets of the common fund of Invesco as at 30 June 2018, while the assets of these two products amounted to 62 % in 2017, has also revealed Mr. Huard. It is believed that this proportion is expected to increase significantly.

Increase in assets and reduction of costs

Also, the more a fund’s assets increase, the more the provider will seek to reduce costs, according to the regional vice president of Invesco.

Sun Life global investments is a good example. In the beginning of the year, the manufacturing and its subsidiary, Excel Funds have reduced the fees of many funds Excel, to an extent of 0.05 % to 0.45 %. “Sun Life global investments has grown dramatically in recent years, now having assets under management of $ 20 billion, and we are thrilled to be able to share this success with the customers by reducing the cost of investments”, had then explained Rick Headrick, president, Sun Life global Investments and Excel.

A busy summer

On the 1st of August, a few days after Invesco, CI Investments has reduced the management fee of 33 mutual funds in a range, which varies between 5 and 55 basis points (or 0.05 % to 0.55 %). IT has reduced at the same time reduces the minimum investment required to be eligible for its program to a schedule of fees on a sliding scale preferential Rates. For individual investors, it goes from 150 000 $ to 100 000 $ and 250 000 $ to 100 000 $ for households, which include the accounts of the members of the same family. The any from 1 October 2018.

“Hundreds of thousands of our investors will benefit from the important changes to the costs,” said Roy Ratnavelsenior vice-president and national director of sales at CI Investments. “ICS is committed to continually improve its product range and to offer you investments effective for canadian investors so that they reach their financial goals “, he adds.

Other fee reductions

Always on the 1st of August, Manulife Investments has reduced the cost of ten of its mutual funds, in a range of 0.05 % to 0.25 %. In addition to these reductions, the private Trust fixed Income Manulife corporate has reduced from 0.03 % of the fixed administrative costs of all of its series. In addition, Manulife has reduced from 1.25% to 1.00% the commission’s monitoring of its funds, Balanced Portfolio, Simplicity, Balanced Portfolio global Simplicity and Simplicity Growth Portfolio.

“These reductions will help align the trailing commissions of these Funds, with the rates in force in the industry. We anticipate that the standardisation of the remuneration of brokers will simplify the comparison and the aspect contrasting the selection of fund advisors and investors, ” said the company.

On 23 July, Great-West, London Life and Canada Life have announced fee reductions for clients with more than 100 000 $ in assets held in several of its segregated funds, including the standard series, the series Partner, the series a preferred 1, and the series a preferred Partner.

On 9 July, Desjardins investment Company has reduced the management fee of 6 Desjardins Funds, in an extent of 0.05 % to 0.29 %.

And the list stretches again… until the beginning of the year. For example, BMO Investments has reduced the 24 April the cost of its entire range of funds, including exchange-traded funds, in an extent of 0.05 % to 0.45 %. It has increased from 0.75 % to 0.60 % of the commission follow-up of the four funds Portfolio of education.

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