Skandia and Cofunds are stepping up their efforts to create new share classes, as they get ready for the UK’s Retail Distribution Review (RDR).
Skandia has started the process of launching new unbundled share classes with lower annual management charges.
Those will be referred to as “unbundled” on the Skandia platform, as opposed to “clean”, because they will still have a rebate where possible. Skandia says it will pass the rebate back in full to the client in form of additional units.
This approach, Skandia says, is the quickest solution to minimise tax liability for unwrapped investors in a rebate model and maintains net fund costs.
Competitor Cofunds says it is “on track” to reach 3,000 clean share classes on its platform by July, adding that cleaner share classes “make things simpler for everyone”.
The RDR bans cash rebates on new business from next year, and legacy business from 2016. The changes resulting from the RDR are expected to increase complexity for fund managers and put pressures on fees.
“Platforms are likely to accelerate the move to clean share classes and they will want to negotiate deals with fund managers for individual discounted share classes,” says Andrew Power, lead RDR partner at Deloitte.
“This will be challenging for fund managers who will not want the time-consuming and expensive process of creating multiple share classes for the same fund.”
Power predicts more consolidation, and faster. He also says the fact that funds will have multiple share classes could make movement across platforms more complex, regardless of re-registration rules.
©2013 funds europe
