Share Class Conversion

Background

Certain fund share classes, generally known as ‘rebate share classes’ rebate a percentage of their annual management charge back to investors. According to the rules of the Financial Conduct Authority (FCA), if we receive a share of the annual management charge from a fund manager, we are required to pass that share onto the client in the form of additional units (or, in very restricted circumstances, cash). Currently we choose to invest these rebates into a qualifying money market fund, presently the Fidelity Cash Fund.

Since this FCA rule was introduced in 2012, fund managers have launched new share classes generally known as ‘clean share classes’. These share classes do not pay rebates but often have lower annual management charges. Therefore they may be cheaper for clients.

With the aim of enabling clients to benefit from these share classes without having to take advice or give instructions to us and to improve our operational efficiency, Transact has opted to gradually phase out ‘rebate share classes’ from the platform.

Share Class Conversions to Cheaper or No More Expensive

As a first step, our intention is to convert ‘rebate share classes’ that clients hold into clean share class equivalents – provided that these clean share class equivalents are cheaper or no more expensive than the ‘rebate share classes’. We are aiming to convert these by fund manager in several phases over the next eighteen months starting in April 2023. Please note that clients will receive contract notes in the usual format following each conversion. Clients also have the right to request a KIID (Key Investor Information Document) for the new fund they are being converted to. Advisers can find these documents on TOL. Clients can request these by reaching out to us on the contact details below.

Clients Affected

A schedule of the dates of conversion for each fund and share class is available within the spreadsheet linked below and will be continuously updated over the coming months for future conversions.

Please note, any transfers that contain a converting fund that complete after the date the fund has been closed will not be subject to the conversion schedule, but will still be converted over the coming months.

If you have any questions please contact your regional Client Service Team.

Conversion Schedule