AJ Bell  

AJ Bell cuts charge on passive funds

AJ Bell cuts charge on passive funds

AJ Bell has cut the annual charges on three of its passive multi-asset funds as part of its commitment to pass on cost efficiencies to investors as its funds grow in size.

The largest fund to benefit from the reduction was the £47m AJ Bell Balanced Passive fund, which now has an ongoing charge figure (OCF) of 0.4 per cent.

The fund’s fee had previously been cut in June 2018 to 0.47 per cent from its original 0.5 per cent charge.

The Adventurous and Moderately Adventurous funds meanwhile have seen their OCFs cut from 0.5 per cent to 0.44 per cent, in what was the first fee reduction since their launch in March 2017. 

As at the end of December 2018, the Moderately Adventurous fund had £30.6m in assets under administration and the Adventurous fund had £30.17m.

Kevin Doran, chief investment officer at AJ Bell, said: "It is an oddity in the fund management market that despite many costs that fund managers incur being fixed, the percentage charge that customers pay often doesn’t decrease as the funds grow in size.  

"The approach we have taken is to fix the charge we levy to run the funds and then any cost savings we can achieve, either through efficiencies of scale or negotiating down underlying fund charges, automatically benefit customers."

AJ Bell also stated it was "committed to reducing the costs further across the entire range". 

Scott Gallacher, chartered financial planner at Rowley Turton, said: "Whilst the fall in the OCF is clearly to be welcomed there are still cheaper passive options out there from the likes of Vanguard and, with passives in particular, cost is a key consideration."

Jenny Turton is a freelance reporter for FTAdviser