Fidelity join the 'low cost' brigade with triple fund launch

Asset managers Fidelity Worldwide is set to launch three new low-cost multi-asset funds for multi-asset specialist Trevor Greetham.

Subject to FSA approval, the multi-asset allocator defensive, multi-asset allocator balanced and multi-asset allocator growth funds will launch on 10 October.

Fidelity are the latest firm to provide low-cost actively-managed products, following Schroders and JP Morgan earlier this year, that anticipate next year’s industry reforms required under the retail distribution review (RDR).

The funds are modelled on Fidelity’s active multi-asset range, managed by Greetham, which includes the £28.4 million Multi-Asset Defensive, £573 million Multi-Asset Strategic and £351.7 million  Multi-Asset Growth funds.

They will use the same quantitative models and investment process but will use index funds to implement asset allocation decisions. Fidelity says that because the asset allocation process in the new range is implemented using lower cost fund solutions it is able to keep a lid on fees.  

The funds will include an A share class with a 1% AMC and a trail commission of 0.5%, as well as an N share class with an 0.5% AMC with no trail commission. Fidelity na

The move will increase price competition in the growing market of low risk and low fee actively managed funds.

JPMorgan earlier in the year launched the JPM UK Active Index Plus fund, an active-managed fund with a TER of 0.55 per cent. While Schroder’s UK Core Fund, announced in March, will have an estimated total expense ratio capped at 0.4 per cent and targeted to outperform the FTSE All Share benchmark by 1 per cent a year (after fees).

Ben Waterhouse, head of retail sales at Fidelity Worldwide Investment, said: 'In response to rising demand for low cost solutions, we are launching three new funds with an identical approach to active tactical asset allocation but using low cost index components to bring the total cost to the investor down.

'For cost sensitive investors and those perhaps wishing to avoid stock selection risk, the Multi Asset Allocator funds are an alternative solution.'

An end of commission payment for professional financial advisors, required under the RDR, will come into force in December 2012. Asset management firms are preparing for greater competition to attract consumers as the RDR reforms aim to tackle a perceived provider bias among financial advisers.