AJ Bell to launch own funds with passive range

AJ Bell is launching a range of five risk-targeted passive funds in the first quarter of the year making it the first launch of its own funds.

Subject to regulatory approval, the range will be called AJ Bell Indexx funds and is made of Oeics funds mapped to the distribution technology and finametrica risk profiling tools already in use by advisers.

The platform has already launched a managed portfolio service in August, as first reported by Fund Strategy, with a total cost of between 0.48 per cent and 0.52 per cent (0.25 per cent for the MPS plus fund charges).

AJ Bell told Fund Strategy the charges for the new passive range, although not officially set up, will be “within the region” of the existing MPS.

In January, AJ Bell acquired a London-based investment management business in order to launch its own range of funds.

However, while the firm first said it had no plans of getting into full active management as it is not its expertise, it has hinted it “may look” into active funds in the future.

AJ Bell head of fund selection Ryan Hughes points out that the FCA asset management study, which criticised poor performance and lack of value for money from active managers, will lead to more advisers demanding passive funds.

He says: “I think [the pressure on active managers] will further increase the demand for passive fund solutions that we have seen growing slowly but surely over the past couple of years. We see an opportunity to help advisers there by building investment solutions that give them low cost portfolios for their clients using passive investments.

“We’ve started that with our MPS and are now looking to extend that further with a range of fund solutions.  We will then think about what the next stage is based on feedback from advisers.”