Charges on unit trusts slashed

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The Independent Online
INVESCO has nearly halved front end charges on its entire range of unit trusts and personal equity plans.

The fund manager, which has pounds 1.2bn under management, has slashed charges on its 32 funds from 5.25 to 3 per cent.

Many companies axed the front end charges on PEPs before the end of the tax year. Invesco is the first to cut charges on all its trusts rather than just its PEPs. It is not adding an exit charge or increasing the annual charge.

The PEP price war was kicked off earlier in the year by M&G, the country's biggest unit trust company. It cut the front end charges on one of its PEPs and introduced a staggered exit charge that reduces to zero after five years.

Alan Wren, Invesco Fund Managers' managing director, said: 'We are hoping to take enough money to make up difference through volume.'

The change will cut the initial charge on a pounds 6,000 investment by 43 per cent from pounds 315 to pounds 180. If the lower front end charge had been applied to Invesco's Preference Shares unit trust three years ago a pounds 6,000 investment would now be worth pounds 9,379 as opposed to pounds 9,172, an increase in total return of 6.5 per cent. The trust is one of the best performers over three years in its sector.

Two-thirds of Invesco's unit trusts are in the bottom half of the performance tables over three and five years.

Last year Invesco was fined a record pounds 2.3m by the City watchdog Imro over 55 rule breaches, some of which related to the management of the Mirror Group pension fund.

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