Earlier this week, Coronation Fund Managers announced that it’s reducing the fees on a large number of its funds, as well as adopting a simpler and more consistent pricing methodology across the range.
Pieter Koekemoer, head of the personal investments business, says Coronation has also reviewed the benchmarks it uses for evaluating the performance of its funds “to ensure that they are appropriate and consistently applied.”
Coronation also intends changing the mandates applicable to its local general equity funds and its lower-risk global multi-asset fund.
“Since launching our first two unit trust funds in 1996, we have gradually expanded our fund range to a comprehensive offering that now covers core investor needs across both domestic and international markets.
“Our focus has always been on adding value for our investors and avoiding unnecessary complexity.
“We have recently concluded a detailed fund review and believe we can make changes that will further enhance outcomes and make our funds even easier to understand.”
He adds that lower fees mean higher returns, while the changes to benchmarks will give investors clearer information about what to expect from the funds.
“Our local general equity funds will have a larger investment universe, with a view to producing better returns, without materially changing risk budgets.”
Coronation is changing the fees applicable to all its international funds, and six of its local funds.
Most affected funds will see meaningful reductions in through-the-cycle fees and willalso have lower maximum fee caps.
“The changes will make our fee structures simpler and more consistent across our fund range. We are replacing performance-related fees with fixed fees where we believe it will be in clients’ interests, while retaining performance fees for the funds where this will lead to fairer outcomes,” Koekemoer says.
Coronation’s flagship multi-asset funds will charge fixed fees, while its equity-biased funds will have appropriate performance-related fees.
“We are removing performance-related fees in the case of our Capital Plus, Global Capital Plus, Global Managed and Global Opportunities Equity funds. We are also reducing the fixed fees applicable to our Balanced Defensive and Global Strategic USD Income funds,” Koekemoer says.
In addition, Coronation will continue to discount fees on its income- and-growth funds if capital is not preserved over appropriate time periods.
“Both Balanced Defensive and Capital Plus are aimed at investors requiring their investment to grow in line with inflation while they are drawing a regular income. These investors have the dual objectives of not only growing capital over time, but also preserving capital over the shorter term,” he adds.
“Accordingly, we will discount fees applicable to these funds if we do not manage to preserve capital over 12 months (Balanced Defensive) and 24 months (Capital Plus). “