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AJ Bell cuts passive fund charges as assets hit £140m

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AJ Bell cuts passive fund charges as assets hit £140m

Online stockbroker AJ Bell has trimmed the charges on three of its passive funds, as assets in the range breached £140 million following steady inflows buoyed by a waiving of its platform fee. 

AJ Bell has cut the charges on its £46 million AJ Bell Passive Balanced fund from 0.47% to 0.4%, having cut the cost from 0.5% to 0.47% last summer.

Charges on the AJ Bell Passive Adventurous and Moderately Adventurous funds, both housing £30 million of assets, have meanwhile fallen from 0.5% to 0.44%.

Costs attached to the smaller £14 million Global Growth, £12 million Moderately Cautious and £10 million Cautious funds remain at 0.5%.

The funds were launched in April 2017 and use exchange-traded funds and tracker funds to secure exposure to shares, bonds, property and alternative assets.

Charges on the funds have been capped at 0.5%, with AJ Bell's cut of that charge fixed at 0.15%. The remainder is largely accounted for by the costs attached to the underlying exchange-traded and tracker funds the AJ Bell funds invest in.

The funds have enjoyed strong inflows, and taken together they were the bestsellers on AJ Bell's Youinvest platform last year.

Investors were encouraged by AJ Bell's waiving of its platform charge on customers' holdings in the fund. That offer expired at the turn of the year.

'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,' said AJ Bell chief investment officer Kevin Doran.

'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.'

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