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JP Morgan defends fund after transaction cost revelations

JP Morgan defends fund after transaction cost revelations

Fund firms have defended their transaction costs after the extent to which they were part of fees charged to investors was revealed.

As FTAdviser previously reported, research from consultancy firm the Lang Cat compiled the transaction costs of a range of open-ended funds.  

Under Europe-wide Mifid II regulations in force since the start of this year, investment firms must now disclose the transaction costs on each fund.

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The Lang Cat research revealed the £968m JP Morgan Global Macro Opportunities fund had the biggest additional cost related to dealing, with an extra 0.66 per cent of charges on top of the fund's annual management charge.  

A spokesman for JP Morgan Asset Management said: “JP Morgan Asset Management is using the full Priips [Packaged Retail and Insurance-based Investment Products] methodology for calculating transaction costs.

"We support Mifid II’s [Markets in Financial Instruments Directive] intent to make it easier for investors to compare fees.

"JPM Global Macro Opportunities Fund OEIC generated total return net of fees over one year to 31 December 2017 of 16 per cent. Performance is first decile over 1 year and first quartile over 3 years in the IA Targeted Absolute Return Category.

"The fund’s ongoing charges are also in the lowest quartile in its peer group.”

Also seeking clarify its charges was the £8bn Woodford Equity Income fund, which had transaction costs of 0.28 per cent on top of the 0.75 per cent annual management charge.

Woodford Investment Management has disclosed the transaction costs on its website since April 2016, before the Mifid II rules required it.

FTAdviser understands Woodford Investment Management’s transaction costs have fallen more recently, as the start of the time period for the Lang Cat data was a time when the Woodford fund was attracting substantial inflows and so transaction costs were higher.

David.Thorpe@ft.com