AJ Bell has started cutting fund prices in its passive range in a pledge to pass economies of scale back to the end investor.
Through the structure, the six funds in its passive multi-asset range, will cut charges as the fixed costs of running the funds decreases proportionately.
The £33 million AJ Bell Passive Balanced fund, which launched in April 2017, is the first beneficiary of this regime. The fund will see a cost reduction of 6%, reducing its ongoing charges figure (OCF) from 0.50% to 0.47%.
The remaining five funds in the range will embrace the similar fee decreases as they increase in size.
AJ Bell has also fixed its annual management charge at 0.15%.
'The FCA’s Asset Management Market Study didn’t pull any punches in identifying weak price competition in the market and specifically highlighted the fact that as fund size increases, it is fund groups that benefit from economies of scale, rather than investors,’ said Kevin Doran, chief investment officer at AJ Bell.
‘One of our goals as a business is to drive down costs for our customers. By fixing our AMC at 0.15% and committing to never receiving more than that, all cost savings we can generate through economies of scale or lower underlying investment costs, will automatically benefit our customers in the form of a lower overall price for the funds.'