JPM brings costs debate into active funds

CONTRARIAN INVESTOR

Last week, J.P. Morgan fired the first salvo in what could be a bitter price war in fund management.

The firm announced a successful restructure of its existing JPM UK Active 450 fund into the JPM UK Active Index Plus fund, reducing the underlying total expense ratio (TER) substantially. J.P. Morgan has finally decided to go after the index-tracking fund market. Over the past few years I have been astonished by the unity of the big asset management groups on price. The cost of active fund management has actually gone up as asset managers try to pay for the growing personal financial services ecosystem. Those extra costs eat into investor returns in a market that has yo-yo’d over the pas...