JP Morgan says flows into its low-cost UK Active Index Plus fund have been “tiny” and it has no plans to launch another low-cost fund until inflows improve.
The company converted the £64.3m UK Active 350 fund into the low-cost fund on February 1, 2011 and it now stands at £70m. It has returned 4.5% in the year to March 23, 1% above the 3.5% average for the UK All Companies sector.
Jasper Berens, head of UK retail, says: “Flows into the fund have been tiny but as a whole there have not been huge flows into UK equities and risk assets generally. I am very confident that flows will pick up as risk appetite returns to the market.”
Berens says he has delayed plans to develop more low-cost products in the European, US and global markets.
He says: “Once I can get some traction in UK equities, I can start thinking about other asset classes.”
In March 2011, Schroders launched its low-cost UK Core fund which now has £40m in assets. Last August, it set up its low-cost dynamic multi-asset fund which has £9.4m in assets.
HSBC Global Asset Management launched three low-cost funds in October. Its World Index Cautious fund now has £7m in assets while the World Index Balanced and World Index Dynamic funds both have £6m in assets.
Tim Page, director of Page Russell, says: “It is going to take some time for these products to take off because their target investors are already using passives.”