Capital Group Announces Fee Reductions and Series Simplification Across Its Canadian Lineup
TORONTO, May 25, 2017 /CNW/ - Capital International Asset Management (Canada), Inc. ("Capital Group") announced today a reduction in the Administration Fee for all Series F and Series F4 units of its mutual funds (the "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," said Mark Tiffin, President and Director of Capital Group in Canada.
Lower Fees on June 1: Series F and F4 Fee Reductions Across All Funds
As part of Capital Group's commitment to low fees, the Administration Fee for Series F and F4 of the Funds will be reduced by up to 6 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, 2017.
Below is a summary of the changes based on each Fund's asset levels as of April 30, 2017:
Series F, F4 Administration Fees
Based on Fund Net Assets as of April 30, 2017
| Fund |
Current |
New (as of June 1, 2017) |
| Capital Group Emerging Markets Total |
0.23% |
0.17% |
| Capital Group Global Equity FundSM |
0.10% |
0.05% |
| Capital Group International Equity |
0.21% |
0.15% |
| Capital Group Canadian Focused Equity |
0.18% |
0.13% |
| Capital Group U.S. Equity FundSM |
0.18% |
0.13% |
| Capital Group Canadian Core Plus |
0.20% |
0.15% |
| Capital Group Global Balanced FundSM |
0.20% |
0.14% |
A Commitment to Lower Fees Over Time: Capital Group's Asset-Based Fee Structure
Capital Group's existing fee structure allows Administration Fees to decline as fund assets grow. The following table shows the full schedule of the Administration Fee reductions across all asset thresholds, effective June 1, 2017.
Capital Group uses this asset-based structure for all of the Funds. 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 MER.
Series F, F4 Administration Fees
Based on Fund Net Assets Over Time
|
|
New (as of June 1, 2017) |
|||||
| Fund |
Under $500M |
$500M - $1B |
Over $1B |
Under $500M |
$500M - $1B |
Over $1B |
| Capital Group |
0.23% |
0.17% |
0.14% |
0.17% |
0.11% |
0.08% |
| Capital Group Global |
0.19% |
0.13% |
0.10% |
0.13% |
0.08% |
0.05% |
| Capital Group |
0.21% |
0.15% |
0.12% |
0.15% |
0.09% |
0.06% |
| Capital Group |
0.18% |
0.13% |
0.10% |
0.13% |
0.07% |
0.04% |
| Capital Group U.S. |
0.18% |
0.13% |
0.10% |
0.13% |
0.07% |
0.04% |
| Capital Group |
0.20% |
0.14% |
0.11% |
0.15% |
0.08% |
0.05% |
| Capital Group Global |
0.20% |
0.14% |
0.11% |
0.14% |
0.08% |
0.05% |
Capital Group's lower Administration Fees are expected to result in lower Series F and F4 Management Expense Ratios (MERs) for all of the Funds. Investors should benefit from these reductions beginning June 1, 2017 as operating expenses — which include Administration Fees — are calculated and accrued daily.
MERs published in the Funds' December 31, 2017 annual reports will reflect partial reductions as MER calculations used in these reports reflect fees over the prior 12-month period. Full reductions will be reflected in the MERs published in the June 30, 2018 semi-annual reports.
One Fee-Based Series of Funds
Capital Group will simplify its series lineup by combining its fee-based series. On or about August 18, 2017, 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 August 14, 2017.
Series H units held as of August 18, 2017, 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 from Series H units to Series F units of the same Fund is not considered a disposition for tax purposes.
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. Holders of Series H units will be provided written reasonable notice prior to August 18, 2017.
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.
Tiered Management Fees Reinforce This Commitment to Lower Fees
On June 1, 2017, Capital Group will implement tiered management fee rates on its Emerging Markets Total Opportunities Fund and 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.
| Capital Group Emerging Markets Total OpportunitiesSM Fund (Canada) Annual management fee rates based on total net assets |
||||
| Total Assets |
Series A, T4 & E |
Series B |
Series D |
Series F, H & F4 |
| Under $500 million |
2.00% |
2.15% |
1.50% |
1.00% |
| Over $500 million |
1.90% |
2.05% |
1.40% |
0.90% |
| Capital Group Global Balanced FundSM (Canada) Annual management fee rates based on total net assets |
|||
| Total Assets |
Series A, T4 & E |
Series B |
Series F, H & F4 |
| Under $500 million |
1.75% |
1.90% |
0.75% |
| Over $500 million |
1.70% |
1.85% |
0.70% |
Lower Investment Minimums Broaden Access to Lowest Prices
Capital Group has reduced the investment minimum for Series H units from $125,000 to $500 per Fund, per account, effective June 1, 2017. 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.
What These Changes Mean To Investors
MER, or Management Expense Ratio includes the management fee, operating expenses (including the Administration Fee), and taxes on those fees. Lower fees and lower taxes on those fees result in lower MERs, which contribute to better results for investors. By reducing its fees and simplifying its fee-based lineup, Capital Group is continuing its longstanding practice of making decisions based on what they believe is in the best long-term interest of investors.
Information about these changes will be available in the Funds' simplified prospectus which will be available through SEDAR at www.sedar.com and through the Manager's website at https://www.thecapitalgroup.com/ca/investments/prospectus-reports.
About Capital Group
Capital International Asset Management (Canada), Inc. and Capital Group funds are part of Capital Group, a global investment management firm originated in Los Angeles, California in 1931. Since that time, Capital Group has been singularly focused on delivering superior, consistent results for long-term investors, using high-conviction portfolios, rigorous research and individual accountability. At the end of 2016, Capital Group managed more than US$1.47 trillion in assets for millions of individual and institutional investors around the world.
SOURCE Capital Group Canada
Caroline Semerdjian, Media Relations, (213) 615-3185, Email: [email protected], Website: thecapitalgroup.com/ca
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