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AJ Bell slashes 20% off fees for biggest passive

Pension and platform company AJ Bell has reduced its fees for three passive multi-asset funds by up to 20 per cent.

It says this is to pass on cost efficiencies as the funds grow in size.

The ongoing charges figure for the AJ Bell Balanced fund was reduced from 0.5 per cent to 0.47 per cent in June last year. It has now been reduced again to 0.4 per cent meaning a 20 per cent drop in fees since the range of six funds was launched in 2017.

This is the largest of the passive funds offered by AJ Bell. According to Trustnet it held £45.6m of assets as at the end of December 2018.

The OCF has also been cut by 12 per cent, from 0.5 per cent to 0.44 per cent, for Adventurous and Moderately Adventurous. These are the next two largest funds by assets with 31 December 2018 figures at £30.2m and £30.6m respectively.

OCF for the company’s passive range was capped at 0.5 per cent at launch. AJ Bell’s annual management charge is fixed at 0.15 per cent. It promises to pass back efficiencies of scale, by way of lower OCFs, as they happen.

AJ Bell chief investment officer, Kevin Doran (pictured), says: “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.

“This innovative approach has resulted in reduced charges on our most popular fund by 20 per cent since launch and we are committed to reducing the costs further across the entire range.”

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