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AJ Bell cuts managed portfolios fees by 40%

Pension, investment and platform provider AJ Bell has cut its managed portfolios service fees by 40% and also changed the asset allocation strategy for its portfolios from a risk-rated to risk-targeted approach.

AJ Bell cuts managed portfolios fees by 40%

AJ Bell has cut its managed portfolio service fees by 40% from 0.25% to 0.15%.

The range of five portfolios uses passive investments and users will incur ongoing fees of between 0.15% to 0.18% and a total cost of investing between 0.33% and 0.36%.

AJ Bell has also changed the asset allocation strategy for its managed portfolios from a risk-rated to a risk-targeted approach.

According to the company, this change is intended to ensure the portfolios consistently target the right level of volatility, giving advisers and their clients greater certainty of ongoing suitability.

AJ Bell’s new in-house strategic asset allocation approach for the portfolios will be benchmarked against Distribution Technology’s Dynamic Planner risk ratings.

Previously AJ Bell took the asset allocation from Moody’s and mapped each portfolio to a Distribution Technology risk level. Now the portfolios will be directly benchmarked against the Dynamic Planner risk ratings and the asset allocation will all be done in-house.

Portfolios with the service are broadly diversified across asset classes and regions and are automatically rebalanced quarterly to keep them aligned with their risk targets. 

Kevin Doran, chief investment officer and managing director at AJ Bell Investments, said changes were intended to lead the way on low prices.  

‘Our aim with the model portfolio service is to deliver a high quality investment solution to advisers, whilst leading the market on price. 

‘We have been focusing on making our investment process as efficient as possible and are able to pass the cost savings back to advisers and their clients in the form of lower annual fees,’ said Doran.

Doran explained the move to risk-targeted solutions was designed to help advisers dodge ‘nasty surprises.’

‘We know that many advisers value Distribution Technology’s Gold Badge risk-targeted solutions and so we will be moving to those in order to give greater certainty that the portfolios will always remain within the targeted volatility ranges. 

‘This should make it easier for advisers to use the portfolios within their existing business processes and ensure there are no nasty surprises,’ he said.

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