Toronto-based Capital International Asset Management (Canada), Inc. on Thursday announced a reduction in the administration fee for all Series F and Series F4 units of its mutual funds, as well as tiered management fees on certain funds and other changes that simplify pricing and provide greater access to its lowest fees for retail investors.
“We’re streamlining our offerings and passing along efficiencies to investors,” says Mark Tiffin, president and director of Capital Group in Canada, in statement.
The administration fee for Series F and F4 will be reduced by up six basis points to match the current administration fee for Series H units, which offer Capital Group’s lowest available prices for retail investors. This change will be effective June 1.
Capital Group also announced the full schedule of the administration fee reductions across all asset thresholds, effective June 1. As a fund’s assets pass certain thresholds, its administration fee is reduced, allowing investors to benefit from economies of scale and contributing to a lower management expense ration (MER).
The lower administration fees are expected to result in lower Series F and F4 MERs for all of the funds, the company says.
Investors should benefit from these reductions beginning June 1, as operating expenses — which include administration fees — are calculated and accrued daily.
Full reductions will be reflected in the MERs published in the June 30, 2018 semi-annual reports.
Capital Group also announced it will simplify its series lineup by combining its fee-based series. On or about Augl 18, Series H units of the funds will be redesignated into corresponding Series F units, which will offer the same management and administration fees as Series H units. Series H units will no longer be offered as of Aug. 14.
Series H units held as of Aug. 18, unless directed otherwise in writing by a unitholder’s dealer, will automatically change, at no cost, into Series F units of the same fund. This automatic change is not considered a disposition for tax purposes, the company says.
Following the redesignation, all existing optional plans for Series H units, including automatic investment plans and systematic withdrawals plans, will automatically be moved to Series F units, unless otherwise indicated by the unitholder’s dealer.
“By offering one fee-based series at one low cost, this change will make it easier for both advisors and unitholders to determine the appropriate retail series at the lowest available prices,” Capital Group says.
On June 1, the company will implement tiered management fee rates on Capital Group Emerging Markets Total Opportunities Fund and Captial Group Global Balanced Fund to pass economies of scale on to investors. A new lower management fee, as indicated in the table below, will apply to fund assets in excess of $500 million.
The company will also reduce the investment minimum for Series H units from $125,000 to $500 per fund, per account, effective June 1. This change will allow all fee-based investors to have access to Capital Group’s lowest available retail fund prices, at a low minimum amount.
(Full details of the fund changes are available in the company’s announcement.)