NFU Mutual slashes AMCs as returns drop

NFU Mutual has cut the annual management charges (AMC) on its deposit fund due to diminishing returns.

The AMCs on the five units within the mutual's $51m deposit fund vary from 0.675% to 1.5%, with an average of 1%.

However, growth for the deposit fund, which is invested in cash equivalents, has sat at zero for the year so far and so NFU Mutual has written to investors explaining it is cutting the AMCs in order to prevent losses to their capital.

"In circumstances where the return achieved by the fund is less than the AMC, this will effectively result in a reduction in the capital value of the investment," an NFU spokesperson said.

"The Bank of England base rate has been at a record low level since March 2009, and because of the exceptional market conditions resulting from the credit crunch and recession, the growth achieved by the deposit fund over the past months has been lower than the AMC."

The spokesperson added the AMCs on each product within the deposit fund have been reduced according to their performance, but could not give specific data.