Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
On 6 January 2020, we’ll be making a couple of changes to our range of AJ Bell funds.
If you hold one of our funds, you’ll already have received a corporate action notice describing the two changes. But to remind you, here’s an explanation of what we’re changing, and why.
We’re renaming the funds
First, we’ve decided to rename the AJ Bell growth funds, by removing ‘Passive’ from their names. So, for example, the ‘VT AJ Bell Passive Balanced fund’ will be simply called the ‘VT AJ Bell Balanced fund’.
What’s in a name? Well, we’ve had feedback from our customers, as well as the wider industry, that the word ‘passive’ has negative associations. It has led some investors to think the funds were unmanaged. This isn’t the case, of course. Our range of funds are looked after by a dedicated team of investment professionals. So to better reflect our management style, we’ve decided to lose the word ‘passive’.
We’re moving to swing pricing, to protect investors
Second, we're moving to a model of swing pricing. This is a change to the way we cover the transaction charges incurred when investors buy into or sell out of our funds.
Whenever an investor buys into or sells out of a fund, it incurs various costs which the fund needs to cover. For example, commissions paid to brokers, or transaction taxes. These costs hinder overall performance, having a tangible effect on returns for holders of the fund – an effect known as ‘dilution’.
That’s why we’re moving to a frame of swing pricing: to protect investors from the effects of dilution. Swing pricing works by adjusting a fund’s price upwards or downwards each day, in line with net flows in or out of the fund. We believe this approach treats all investors fairly because it ensures that investors who buy into or leave the fund – i.e. those who cause the dilution – bear the costs rather than the existing holders. AJ Bell Investments doesn’t benefit in any way from this change, and keep in mind it isn’t a separate charge for investors.
Importantly, neither of the above changes will fundamentally alter the way we at AJ Bell Investments manage your fund. You can still look forward to the same professional service, dedicated as ever to providing simple, transparent and low-cost investment solutions.
These articles are for information purposes only and are not a personal recommendation or advice.
