IBoss Asset Management has ramped up the exposure to passives in its range of risk-rated multi-manager funds in order to reduce its fees.
The four funds launched a year ago and are run by IBoss co-founder Chris Metcalfe, who invests in equities, fixed interest, property and cash through active managers and trackers.
The average passive weighting in each of the funds has risen from 5 per cent to 30 per cent, and Metcalfe does not rule out this increasing further.
He says: “We have spent an extensive amount of time working out why certain active managers have performed well and whether or not this performance can be replicated in a tracker. However depending upon market conditions the current 70-30 split could alter in future.”
The higher weighting in passives has enabled IBoss to cut its ongoing charge fee across the range in response to client demand, while maintaining the same objectives.
Previously, the OCF was 1.1 per cent for the lowest risk fund, Mgts IBoss 1, 1.22 per cent for Mgts IBoss 2, 1.32 per cent for Mgts IBoss 4 and 1.36 per cent for Mgts IBoss 6, the highest risk fund.
The OCF has now fallen to 0.78 per cent (Mgts IBoss 1), 0.8 per cent (Mgts IBoss 2), 0.93 per cent (Mgts IBoss 4) and 0.95 per cent (Mgts IBoss 6).
Metcalfe says: “The ongoing aim is for the OCFs to be no more than 1 per cent, however as it stands today, we couldn’t have gotten the fees any lower without compromising each’s funds stated objective.”
The holdings in active funds cover the small and mid-cap space while the trackers provide exposure to UK large caps, Metcalfe says.
Metcalfe adds: “We have listened to the regulators and our clients on both costs and the benefits of active management and we feel these are now best of breed.”