BAILLIE GIFFORD CUTS CHARGES ON AMERICAN FUND

Leading Edinburgh based investment firm Baillie Gifford has cut the annual management fee on its £502m American fund. The move which was put into effect on 1 January sees their fee for class B shares of the fund reduced from 0.65 per cent to 0.5 per cent. The reduction comes on the back of an overhaul of the fund by Tom Slater the co-manager of the Scottish Mortgage investment trust but still leaves it a shade more expensive than Scottish Mortgage which charges 0.45 per cent.

Slater, who co-manages the fund with Gary Robinson and Helen Xiong, has reshaped Baillie Gifford American over the last year by buying some of the high growth stocks that have been the hallmark of the top-performing £4.3 billion Scottish Mortgage trust he runs with James Anderson.

James Budden (pictured) - director of retail marketing and distribution at Baillie Gifford said “We want our American fund to be as competitive as possible. Received wisdom has it that active management does not work in the US market given its supposed efficiency. We happen to believe the opposite can be true and by cutting our fee on this fund we are giving ourselves and its investors a greater chance of beating the index over the long term.”

The move comes not long after Baillie Gifford amended the management fees for its Shin Nippon and Edinburgh Worldwide investment trusts.

The boards of both trusts introduced a new layer to their tiered fee structures in September last year. An annual management fee of 0.95 per cent was agreed on the first £50m of net assets and 0.65 per cent on net assets above £50m, with an additional tier of 0.55 per cent introduced on net assets above £250m. Fees will continue to be calculated and levied at the end of each quarter.

At the time Budden said “The investment trust industry has to take the initiative if it wants to compete in the new world of transparency and clarity of costs for investors. There is an opportunity for the boards of trusts and managers to work together to grow assets under management and drive down fees for the end investor.”