Fees dropped for savers trapped in Russia funds

Investors blocked from withdrawing their money from suspended Russian funds will be spared the pain of paying high fees while their life savings diminish by the day after this newspaper drew attention to the problem.

The world’s biggest asset manager, BlackRock, has waived the 0.59pc annual charge on its $ 1bn (£ 760m) ERUS ETF. The fund, which invests in Russian stocks, was forced to cease trading at the start of this month when the country’s stock market closed.

BlackRock also waived fees on other suspended funds that invest in the region after “an unprecedented 10 days”, including its Emerging Europe fund, which costs 2.07pc a year.

This followed a similar announcement from asset manager Liontrust, which paused the fee on its suspended Russia fund.

Liontrust said waiving the charge was the “right thing to do”, acknowledging that its decision to shutter the fund was “very disappointing for investors”. It said it would backdate the fee suspension to March 1, when the doors shut.

The fund’s assets have lost more than 80pc of their value since Russia invaded Ukraine. British investors are thought to have almost £5bn trapped in Russian markets.

Last week Telegraph Money reported that thousands of people blocked from withdrawing money from Russian investment funds were still being charged high fees.

Initially, most fund houses said fees would remain in place. Critics said it was “unfair” and morally questionable to carry on charging investors barred from protecting their savings.

Robin Powell, a campaigner, welcomed the news and said the past two weeks had been incredibly stressful for savers.

“Let’s hope that, next time, fund companies won’t need to be cajoled into doing the decent thing,” he said.

“There’s no excuse for other firms not to follow. Managing other people’s money is extremely lucrative and it’s only fair that fund managers share some of the pain when things go wrong.”

Schroders, a fund firm, has refused to drop the 1.87pc annual charge on its £1.3bn Emerging Europe fund, which has also been suspended. Investors’ savings have dropped by about a quarter since the invasion.

Its largest holding is Gazprom, the Russian state-backed oil giant, which makes up almost 9pc of the fund, followed by Sberbank, a state- backed bank, which accounts for 8pc. The firm justified the continued charges by saying it was still actively managing investors’ money.

JPMorgan waived the fees on a number of suspended funds that invest in the region from day one.