JP Morgan Asset Management (JPMAM) has launched an active UK equity fund designed to challenge fee levels in the passive market.
JPMAM says its JPM UK Active Index Plus Fund is “possibly the UK’s first low cost, active managed, open ended investment solution to challenge the passive market”.
As a result, from 1 February 2011, the JPM UK Active 350 Fund will be renamed the JPM UK Active Index Plus Fund and carry a significantly reduced annual management charge of 0.25% per annum and fixed expenses of 0.15% per annum (0.40% per annum combined).
The fund will seek to outperform the FTSE All-Share index and will charge a performance fee of 10% (with a cap) when it does - meaning the total expense ratio of the fund will not exceed 0.55%. The changes have been approved by a majority of existing shareholders.
Jasper Berens, head of UK retail sales at JPMAM, said: “We know that today’s investors are increasingly concerned about fund charges and a preferred route to seeking lower cost funds has been through lower risk investments. However, the solutions currently available to them are dominated by passive tracker funds.”
He says JPMAM believes that many investors buy these funds because they are low cost rather than because of a specific preference for passive management.
“We’ve now created a low cost actively managed alternative that meets investor demand and challenges passive investing.”
In reference to the Financial Services Authority’s retail distribution review, Berens added that the product is also designed to be the firm’s first, and possibly the retail fund management industry’s first, “RDR-ready” Oeic with all adviser commissions stripped out.
“There seems little reason why an adviser in the UK that has either bought or is thinking about buying or recommending a UK equity passive fund should not consider this fund instead,” said Berens.
He added that the performance fee means investors only pay for the benefits of active management when they are reaping its rewards.
The fund, in its new guise, will continue to be actively managed by the same investment management team as before, led by Michael Barakos, using the same investment process but with a lower risk management framework. Also, the fund will now change its benchmark from the FTSE 350 index to the FTSE All Share Index in line with other comparable products.
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