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AJ Bell prepares passive funds push

Funds supermarket follows arch-rival Hargreaves Lansdown with plans to launch funds, although its will be ‘clean and competitive’ trackers.

 
AJ Bell prepares passive funds push
Fund supermarket operator AJ Bell plans to follow arch-rival Hargreaves Lansdown and become a provider as well a retailer of investment products with the launch of its own fund range.

The operator of the Youinvest investment platform, which is backed by a number of active fund managers including Neil Woodford, has announced it will launch a range of passive, index-tracking funds by the end of March.

Chief executive Andy Bell (pictured below) said the funds would be available by the end of March and would be a response to a highly critical report on the investment industry last year by the Financial Conduct Authority. The City watchdog attacked the opacity and high level of charges which contributed in large part to the widespread underperformance of many actively-managed investment funds.

‘The FCA asset management study shone a bright light on fund management fees and this is something we are looking at when developing our own funds,' Bell said. 

‘The funds will certainly be priced very competitively but we are also looking at how we can get the charging structure as clean as possible so that it is easy for investors to understand as well as being great value.'

The new passive funds will be run by Ryan Hughes who joined AJ Bell from Apollo Multi-Asset Management last September.

The company first unveiled its ambitions last year, when it bought discretionary fund manager Mansard Capital and passive fund provider Indexx Markets. This was followed by the launch of a managed portfolio service aimed at the clients of financial advisers.

The passive funds will be available to both advised and execution-only clients.

In opting for index-trackers, AJ Bell is taking a different approach to Bristol-based Hargreaves which established a Multi-Manager ‘fund of funds' range before launching the active HL Select UK Shares fund run by Steve Clayton in December. 

Despite the criticism of the FCA, Bell said the company would move into actively managed funds in future. 

Becoming a funds provider was a natural extension of the platform business and an area where the company had seen demand from investors, he said.

The announcement came yesterday as AJ Bell, a privately-owned company not listed on the London Stock Exchange, published its results for the year to September 2016. These showed pre-tax profits up 8% from the previous year at £16.8 million with investor assets on its platforms leaping 29% to £23.3 billion.

 

2 comments so far. Why not have your say?

Law Man

Feb 07, 2017 at 18:23

Following the liberation of pension funds, and the context where (usually) draw down is better than an annuity, there are many investors who do not know how to invest.

As such their options are:

(1) to take advice from an IFA which, inevitably in view of the regulatory requirements, is expensive; or

(2) muddle along in ignorance.

If bodies such as AJB and HL can offer a suite of "off the shelf" packages of low cost funds/ ITs/ ETFs, along with a simple guidance notes and a basic risk assessment questionary, it will go a long way meet this need.

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SIPPSHAPE

Feb 08, 2017 at 08:26

Coincidence that this comes hard on the heals of their recent price increases , and especially the increase in the charges and cap level for custody of funds. Unless their own funds are excluded from the custody charges, there are lots of proven , cheap trackers already out there.

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