AJ Bell has admitted there are benchmark shortcomings when it comes to examining the performance of its multi-asset funds in its first value for money assessment, which has seen the bulk of its funds deemed value for money.
The AJ Bell fund board said the VT AJ Bell Global Growth fund was the only product assessed that was not first or second quartile over all time horizons relative to its Investment Association sector, meaning it received an amber traffic light rating for the performance section of the report. Its performance is being monitored but there will be no remedial action unless its performance does not improve as global equity markets improve.
The performance records of the VT AJ Bell Income and Income & Growth funds were also deemed too short to determine whether value is being delivered.
However, on an overall basis each of the funds were deemed value for money.
The fund board raised concerns about assessing multi-asset funds on performance, stating “no single financial instrument or index represents a fair benchmark”.
While the AJ Bell Global Growth fund did not get a green-light rating on the performance section of the report, the fund board argued the IA Flexible Investment sector had been a difficult benchmark.
“Global Growth operates a specialist mandate, focusing on higher risk investments such as in Asian equities, emerging markets, robotics and technology,” the fund board said.
“Since launch it has operated with at least 95% exposure to equities. When compared against the broader IA sector performance, it is therefore likely to look good in upward trending markets and poor in falling markets.”
The AJ Bell fund board also praised its costs in the value assessment noting it receives an investment management fee of 0.15% and a cap on growth funds of 0.35% and for income funds 1%. This was because the underlying funds in the income products tend to have higher OCFs.
The assessment also noted AJ Bell had shifted to swing pricing on 6 January so that investors entering and exiting funds bore the costs of the resulting underlying transactions used to manage inflows and outflows.
