JP Morgan Asset Management (JPMAM) has slashed 35 basis points (bps) from the annual management charge of its Life Diversified Growth Fund (DGF) and changed its benchmark.
JPMAM said it reduced the AMC from 75bps to 40bps to better meet the needs of defined contribution (DC) and defined benefit (DB) investors, and to become more competitive with other active and passive offerings.
The fund is now targeting a return of cash plus 4% over a market cycle with a volatility of 6% to 10% as opposed to the “equity-like” returns it previously targeted.
JPMAM said it would aim to achieve this by investing in active strategies across a broad range of assets and actively shifting the portfolio to reflect the investment team’s latest asset allocation views.
The fund has been able to maintain a fully active investment approach by using JPMAM’s Research Enhanced Index (REI) strategies for its underlying equities exposure. According to the manager, these strategies seek to deliver consistent excess returns at low active risk by managing an index-like portfolio that is designed to source the majority of alpha from stock selection.
JPMAM head of UK institutional Paul Farrell said: “The JP Morgan Life Diversified Growth Fund offers both defined contribution as well as defined benefit schemes another tool in the arsenal for improving investment outcomes. The changes not only make the fund highly competitive compared to active investment options, but also make it an attractively valued proposition compared to passive investing.”
It comes after the Financial Conduct Authority published its interim review of competition within the asset management industry which, among other findings, found the price of passive funds has fallen while active prices have remained stable.
