M&G scraps upfront fees and annual charges

In a move that will put pressure on rivals which continue to levy, M&G said it will also stop charging all investors for external research altogether from 1 January 2017.

Unveiling its plans, M&G revealed that it had already quietly dropped the 3-4 per cent entry charges paid by direct customers on every investment for many years.

The move puts M&G’s direct customers on a level playing field with investors buying its funds through Hargreaves, Chelsea Financial Services, Tilney Bestinvest and FundsNetwork, who swept aside upfront fund fees long ago.

However, because M&G’s new tariffs will be all-in charges with no separate platform fees on top, it means the firm will actually undercut fund supermarkets like sector leader Hargreaves Lansdown.

M&G also said it will also offer lower fund charges to its current 190,000 direct investors and any future customers who sign up to a new online service which is due to be launched later this summer.

The ongoing charge figure (OCF) for a typical M&G equity fund, such as the M&G Dividend Fund, will fall to 1.16 per cent for all direct customers with at least £5,000 in their portfolios, the firm said.

The OCF of a typical M&G bond fund, such as the M&G Corporate Bond Fund, will fall to 0.91 per cent.

As an example, a direct investor with £2,500 in each of these two funds, who chooses to move to the new online service, will see the total annual charges he or she pays fall by £18.75.

M&G said there will be no increase to the ongoing charge figure as a result of the changes as it will pay the costs of external equity research itself.

Michael McLintock, chief executive, M&G Investments, said: “The lower fund charges available through our new online service will help our customers’ savings work as hard as possible, whether that’s to provide an income in retirement today, or grow capital for the future.”