Sygnia Asset Management will charge 0% management fees on the Sygnia Money Market fund and Sygnia All Bond Index fund from the start of 2021. The firm made the announcement towards the end of last year.
The zero management fee on these products will apply to all existing investors, and those who make a new investment before June 30, 2021. It will apply until the end of 2022.
“Rather than making it open-ended, we will review the offer two years from now,” said David Hufton, joint CEO at Sygnia. “Importantly, Sygnia is committed to low fees and any re-introduction of management fees, if at all, would not be at higher than current levels.”
The funds will still incur costs such as bank charges, custody, trustee and audit fees, and brokerage for the bond fund. The effect on the total investment charge (TIC) of waiving the management fee is, however, material.
According to Hufton, the expected TIC on the Sygnia All Bond Index fund will drop from 0.48% to 0.07%. In the case of the Sygnia Money Market fund, it will fall from 0.32% to 0.03%.
While he added that Sygnia is not currently planning to extend a 0% management fee regime to other funds, Hufton noted that conversations around costs in the industry will continue to be important.
“The asset management industry is already challenged by downward pressure on fees because of the rise of passive investing,” he said. “Our zero fee offer should serve as a reminder of that challenge building up, especially in a lower return environment with investors becoming increasingly more fee-sensitive.”
Patrick Cairns is South Africa Editor at Citywire, which provides insight and information for professional investors globally.
This article was first published on Citywire South Africa here, and republished with permission.