JP Morgan Asset Management is launching a low cost active managed fund that is designed as an alternative to the passive market.
The JPM UK active index plus fund is a rebrand of the firm’s UK active 350 offering and will have a maximum total expense ratio of 0.55 per cent.
The fund will have its annual management charge reduced to 0.25 per cent per annum as well as fixed expenses of 0.15 per cent. There will be a performance fee of 10 per cent which will be capped to ensure the TER does not pass the 0.55 per cent mark.
The changes were approved in an Extraordinary General Meeting earlier today. The fund will continue to be managed by Michael Barakos but will have its benchmark changed from the FTSE 350 to the FTSE all share index. The changes are set to be made on February 1, 2011.
The £64m UK active 350 fund is currently third quartile in the IMA UK all-companies sector over three years, having returned 6.6 per cent, compared to an average of 10.3 per cent for the sector.
JP Morgan Asset Management head of UK retail sales Jasper Berens says: “We’ve now created a low cost actively managed alternative that meets investor demand and challenges passive investing. We have also designed this product to be our first, and possibly the retail fund management industry’s first ‘RDR ready’ Oeic with all adviser commissions stripped out.
Beren says the fund offers investors the best of both worlds.
He says: “I would challenge any financial adviser that has recommended or placed in a clients portfolio a UK equity passive fund to look at this offering because at its worst will only underperform as much as a tracker will underperform but has the ability to outperform because it is an actively managed fund.”
The fund will have a tracking error of 1 to 1.5 per cent and Berens says the reduction of the annual management fee means it the group can actively compete with passive fund managers.
He says: “There is no reason why an IFA should not look at this. We want to do more in this space in the future as I believe that advisers have been putting passive funds into their clients’ portfolios just because it is cost effective, they now a valid alternative. A lot of this has been down to being a price alternative.”