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Low cost active management from JPM

The JPM UK active index plus fund is a low cost actively managed Oeic that JP Morgan is pitching as an alternative to passive investment.

The fund was created by renaming the JPM UK active 350 fund and reducing its annual management charge to 0.25 per cent a year.  Fixed expenses of 0.15 per cent a year bring the total expense ratio up to 0.4 per cent and there is a 10 per cent performance fee which is capped to ensure the TER will not exceed 0.55 per cent a year.

The revamped fund is managed by the same team that ran the previous version, using the same investment process, but within a lower risk framework.

JP Morgan launched the fund because it could see investors being increasingly concerned about charges and that lower cost options are dominated by passive investments. The firm felt that many investors have bought passive tracker funds on the basis of low cost rather than a preference for a passive investment strategy

The firm felt there was a gap in the market for a low cost actively managed alternative that had adviser commission stripped out in preparation for the retail distribution review. The company points out that passive tracker funds are not designed to outperform their indices. In contrast the JPM UK active index plus fund has that ability combined with lower costs than the average actively managed fund, where charges can potentially eat in to any returns generated by the manager in outperforming an index.

Bringing active management to investors at a lower cost is something that many IFAs and clients are likely to applaud. Schroders is doing something similar with its UK core and QEP global core funds, but some advisers may question whether the approach adds anything relative to the active and passive funds it is competing with. Some may prefer cheaper passive options and others may go for more expensive, unconstrained actively managed funds with greater growth potential.


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