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AJ Bell passes on passive fund cost savings to investors

20 January 2019

AJ Bell has reduced the annual charges on three of its passive multi-asset funds, by up to 20%, as part of its commitment to passing on cost efficiencies as the funds grow in size.

The AJ Bell passive funds were launched in March 2017 with an Ongoing Charges Figure (OCF) capped at 0.5%. Within this, AJ Bell’s Annual Management Charge is fixed at 0.15% and any cost savings as a result of efficiencies of scale or AJ Bell negotiating lower underlying investment costs are passed automatically back to customers in the form of a lower OCF, as and when they happen.

The largest fund is the AJ Bell Balanced fund, which was the first to benefit from an OCF reduction in June 2018 when the 0.5% OCF reduced to 0.47%. This has now been reduced further to 0.4%; a total reduction of 20% since the fund launched.

The next two largest funds by assets, Adventurous and Moderately Adventurous, have also seen their OCFs fall by 12% from 0.5% to 0.44%.

Commenting on the move, Kevin Doran, chief investment officer at AJ Bell, said: “It is an oddity in the fund management market that despite many costs that fund managers incur being fixed, the percentage charge that customers pay often doesn’t decrease as the funds grow in size.

“The approach we have taken is to fix the charge we levy to run the funds and then any cost savings we can achieve, either through efficiencies of scale or negotiating down underlying fund charges, automatically benefit customers.

“This innovative approach has resulted in reduced charges on our most popular fund by 20% since launch and we are committed to reducing the costs further across the entire range.”


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