Following a strategic review, the asset manager has decided to offer a lower cost option for those looking to invest in its Lifetime Distribution fund, just in time for the fund’s three-year anniversary.
The newly launched share class has an estimated OCF of 46bps, not including a transaction cost of around 9bps.
Launched back in March 2015, it is the fifth fund in Axa’s distribution range, which are all co-run by managers Jamie Forbes-Wilson and Matthew Huddart.
Forbes-Wilson explained that increasing downward fee pressures was one of the deciding factors in creating a low-cost share class. Given the fund’s wide appeal, “we felt that this would be an appropriately priced share class for what is a long-term buy and hold type fund,” he said.
The Axa Lifetime Distribution fund is a UK domiciled Oeic modelled after the original Axa Distribution fund. The fund has a central asset mix of 55% UK equities and 45% index-linked gilts.
The style in which the bond portfolio of the fund is managed is one of the reasons why the fund house was able to lower the cost of this strategy in the first place, said Rob Bailey, head of UK wholesale distribution at Axa IM.
The portfolio contains close to 65 UK names and invests across the cap-spectrum. However, it currently has a bias toward FTSE 100 stocks, including big dividend payers like Royal Dutch Shell, HSBC, British American Tobacco, BP and GlaxoSmithKline among its top five biggest holdings.
The vehicle now stands close to £1bn and has produced total returns of 19.8% (in sterling terms) versus the Investment Association Mixed Investment 20-60% Shares sector’s 13.56% since the time of launch.
At the time the original fund appeared back in the 1980s, Forbes-Wilson said it was a “novel combination” of exposure to UK equities and government securities, predominantly index-linked gilts, targeting lower risk investors who want some stock market exposure with protection against inflation.
With inflation ticking upward in most developed markets, the Axa manager says this type of product should appeal to investors.
“We believe that the Axa Lifetime Distribution fund offers investors a neat solution for clients looking for a simple, inflation-plus return,” said Forbes-Wilson. “This fund seeks to meet the needs of those looking to satisfy both growth and income requirements in real terms. The combination of investment in equities and index-linked gilts has been the basis of Distribution fund range for many years and seeks to provide a sound, inflation-linked foundation for long-term investors.”
The share class will be available from 12 February 2018.
