JPM UK Active Index Plus Fund
J.P. Morgan Asset Management is launching the JPM UK Active Index Plus Fund - possibly the UK's first low cost, active managed, open ended investment solution to challenge the passive market.
From 1st February 2011, the JPM UK Active 350 Fund will be renamed the JPM UK Active Index Plus Fund and carry a significantly reduced annual management charge of 0.25% per annum and fixed expenses of 0.15% per annum (0.40% per annum combined). The fund will seek to outperform the FTSE All-Share index and will charge a performance fee of 10% (with a cap) when it does - meaning the Total Expense Ratio (TER) of the fund will not exceed 0.55%. The changes were approved today, with a majority support, by existing shareholders at an Extraordinary General Meeting.
Jasper Berens, Head of UK Retail Sales at J.P. Morgan Asset Management said: "We know that today's investors are increasingly concerned about fund charges and a preferred route to seeking lower cost funds has been through lower risk investments. However, the solutions currently available to them are dominated by passive tracker funds. We believe that many investors buy these funds because they are low cost rather than because of a specific preference for passive management. We've now created a low cost actively managed alternative that meets investor demand and is ‘RDR ready' with all adviser commissions stripped out.
"Passive tracker funds are not designed to outperform their respective indices and are therefore unlikely to do so. However, the JPM UK Active Index Plus Fund offers investors the best of both worlds - a cost effective and competitive base fee but with the potential to outperform the index via active management. Of course, investors should remember that active fund management may result in a corresponding increase in volatility. The performance fee means investors only pay for the benefits of active management when they are reaping its rewards."
The Fund, in its new guise, will continue to be actively managed by the same investment management team as before, led by Michael Barakos, using the same investment process but with a lower risk management framework. Also, the fund will now change its benchmark from the FTSE 350 index to the FTSE All Share Index in line with other comparable products.
Berens concluded: "I would urge investors that have used or are considering using passive index products at the core of a UK equity portfolio, to consider this fund. The risk and fee changes in this fund have been designed to offer a viable alternative to passive funds while retaining the ability to outperform, which passive funds are unlikely to do. The JPM UK Active Index Plus Fund is actively managed with an excellent investment team and a strong, robust and long standing investment process."