Baillie Gifford cuts American fund fee

The move, which was put into effect on 1 January, sees the fee for class B shares of the fund reduced from 0.65 per cent to 0.5 per cent.

The reduction still leaves it slightly more expensive than Scottish Mortgage, which charges 0.45 per cent, and comes fresh from an overhaul of the fund by Tom Slater, co-manager of the Scottish Mortgage investment trust.

Slater, who co-manages the fund with Gary Robinson and Helen Xiong, has reshaped Baillie Gifford American over the last 12 months, 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.

Over three years to 4 January, the Baillie Gifford American fund has returned 72 per cent, outperforming its IA North America sector average of 60 per cent during the period. Over one year, the fund returned 32 per cent, in line with the sector average.

James Budden, 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.”