AJ Bell slashes fees to ‘stand toe-to-toe’ with cheapest funds

But experts note there are cheaper options

AJ Bell


AJ Bell has further slashed fees on all six of its passive multi-asset funds to “stand toe-to-toe” with the cheapest funds, but industry experts note they are still not the lowest priced in the market.

The AJ Bell passive funds were launched in March 2017 with an ongoing charge figure (OCF) capped at 0.5%.

In January, AJ Bell announced it was cutting fees for its Balanced fund, the largest in the range, to 0.40%. It also slashed the OCF on its next largest funds, Adventurous and Moderately Adventurous, from 0.5% to 0.44%.

In an update on Thursday, AJ Bell said all six passive funds will have an OCF cap of 0.35%. Its annual management charge remains fixed at 0.15%.

Fund Old OCF cap New OCF cap
AJ Bell Passive Cautious 0.50% 0.35%
AJ Bell Passive Moderately Cautious 0.50% 0.35%
AJ Bell Passive Balanced 0.40% 0.35%
AJ Bell Passive Moderately Adventurous 0.44% 0.35%
AJ Bell Passive Adventurous 0.44% 0.35%
AJ Bell Passive Global Growth 0.50% 0.35%
Source: AJ Bell

Kevin Doran (pictured), chief investment officer at AJ Bell, said: “We’ve kept that promise through a series of reductions to the OCFs on three of the funds and are now in a position to apply further reductions to the entire range.

“With the OCF now capped at 0.35%, the funds stand toe-to-toe with the cheapest multi-asset funds in the market. Offering true multi-asset exposure and an unfettered approach to investment selection, we make the same low price available to all investors, regardless of which platform they use and irrespective of whether they’re advised or not.  We just think it’s about time investment was made easy.”

Not the cheapest

However, experts in the industry argue there are still cheaper funds out there.

Adrian Lowcock, head of personal investing at Willis Owen, claimed that while the cut is significant and helps simplify the pricing for investors, as the range is “very competitive”, it is still “not necessarily the cheapest”.

“In passive funds the price is of major importance as any costs will effectively detract directly from performance – there is no ability to add value through active management.

“This is all part of a trend in the passive space we have seen over the last decade where the cost of passive solutions has been coming down for some time.”

Likewise, Heather Hopkins, managing director at NextWealth, said AJ Bell is doing what it said it would do. “They are cutting price as the fund grows in size and they are also making tweaks to make it easier for investors to understanding the charges. I applaud them for passing on cost savings to investors.

“The lower charge brings the range in line with lower cost options. It’s not the lowest cost but the charges are moving down as the fund grows in size. It is important that businesses and products are priced in a way that is sustainable and good value.”

Last month, Doran hit back at at comparisons between charges on the platform’s passive multi-asset range, arguing rival fund groups use multiple share classes to appear optically cheap.