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JPMorgan launches assault on passive funds with fee cut

JPMorgan Asset Management is slashing the fees on its £61m JPM UK active 350 fund in a bid to compete with ultra-low cost index tracker funds.

The group has outlined plans to shift the fund’s investors into a new low-cost share class and rename the fund as JPM UK active index plus, in response to the wave of recent criticism of the ’expensive’ active fund industry.

The JPMorgan fund, managed by Michael Barakos and Christopher Llewelyn, currently carries retail charges of 1.18 per cent a year and 0.6 per cent for institutions. Under the plans both types would see their total annual fees capped at roughly 0.55 per cent.

This includes 0.4 per cent of basic charges and a 10 per cent performance fee, which stops accruing if the fund exceeds its FTSE all share benchmark by more than 1.5 per cent in any given accounting period.

Head of UK business Roger Thompson says in a circular: “In the current economic climate we are aware that investors are becoming increasingly concerned about fund charges and seeking ‘low cost’ products. However most low cost funds are tracker products which are passively managed and offer little, if any, potential to outperform the relevant index they are tracking.”

The changes are pending the outcome of an emergency general meeting to be held on January 28 and will be implemented on February 1 if investors approve.

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There is one comment at the moment, we would love to hear your opinion too.

  1. Gareth Horsfall 6th January 2011 at 6:32 pm

    Its about time the industry woke up to lower fee structures. Ultimately, if UK advisers have to go fee based in 2012, what will be the incentive to continue using managed funds that rarely outperform and charge spectacularly high fees without justification. Bravo! JP Morgan for moving forward in the right direction.

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