Baillie Gifford announces move to publish figures for its active share tracking
BAILLIE Gifford will take an industry lead this week by publishing active share figures for its retail funds, amid criticism of many fund firms for charging active management fees for index-tracker funds in disguise.
The active share is the percentage of a fund’s hold- ings that differs from its benchmark, giving an indication of how actively managed it is.
A 2013 report from SCM Private claimed that nearly half of all UK equity funds were guilty of being “closet trackers”, charging higher fees than tracker funds but not differing significantly from their benchmark index.
Earlier this week the Finan- cial Conduct Authority was reported to be considering whether or not to investigate the issue.
Now Baillie Gifford has said the active share for its funds at the end of 2014 ranged from 69 per cent for its Greater China Fund to 99 per cent for the Global Discovery Fund.
Its flagship investment trust, the £3 billion Scottish Mortgage, has a 95 per cent active share and the lowest among its seven trusts is 83 per cent at Pacific Horizon.
Edinburgh Worldwide has the highest active share at 99 per cent with Monks at 96 per cent.
James Budden, the firm’s director of retail marketing and distribution at Baillie Gifford, said: “We are passionate about the value of truly active management and recognise the need for investors to be able to identify an actively managed fund from in-andamongst the shoal of ‘closet tracker’ funds.”
Mr Budden went on: “You can only outperform by being different from the index. Anything over 60 per cent suggests you are on the right track.
“Clients need to be sure that they are getting what they are paying for.”
Gina Miller of SCM Private, which runs the True & Fair Campaign, says savers are being overcharged by £3 billion over a five-year period in fees charged for services not provided by managers.