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% a year and 0.6% for institutions. Under the plans both types would see their total annual fees capped at about 0.55%.

This includes 0.4% of basic charges and a 10% performance fee, which stops accruing if the fund exceeds its FTSE All Share benchmark by more than 1.5% in any given accounting period. (article continues below)

Roger Thompson, the head of UK business, 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.