Aberdeen Standard Investments (ASI) is mirroring the strategy employed by Fidelity Investments in the US by launching a low-cost index fund range that is only available on its platform.
The suite is offering products at some of the cheapest prices in Europe, going as low as 0.03% for its US, Europe ex-UK and short dated sterling corporate bond funds.
It will charge 0.05% for the Japan fund, 0.07% for the Japan equity, short dated global aggregate and short dated global index-linked bond funds, while the emerging market product will cost 0.10%.
The index funds will be managed by the firm’s 30-strong quantitative investment strategies team.
The catch is the eight index funds are only available on Standard Life’s Wrap and Elevate platform meaning investors will not be able to access them unless they have an account on the platform.
This model has been done in the US when Fidelity launched the world’s first zero expense ratio index funds last August, FZROX and FZILX. The idea is the cheap funds attract flows to platform and in turn, the more expensive funds are bought as well. One is not able to do this with ETFs as they trade on exchange.
Sean Phayre, global head of quantitative investing at ASI, commented: “We are increasingly experiencing client demand to make use of the latest advances in passive and wider quantitative investing. Both areas play key roles in efficient portfolio construction and risk management.”
David Tiller, head of UK propositions at ASI, added: “Since taking the lead in platform unbundling and ‘superclean’, Standard Life has a track record of actively negotiating with investment managers to secure greater fund choice for advisers using Wrap and Elevate.
“Nowadays, more advisers are looking for flexibility to make the right active decisions while ‘cost balancing’ their portfolios using an index fund allocation.”
European ex UK Equity index fund tracks the MSCI Europe ex-UK index and charges 0.03%.
US Equity index fund tracks the S&P 500 and charges 0.03%
Japan Equity index fund tracks the MSCI Japan and charges 0.05%
Short Dated Sterling Corporate Bond index fund tracks the Markit iBoxx GBP Non-Gilts 1-5yrs Total Return index and charges 0.03%
Short Dated Global Corporate Bond index fund tracks the Bloomberg Barclays Global Aggregate Corporate 1-5 yrs Total Return Index (GBP hedged) and charges 0.07%
Global Index-Linked Bond index fund (GBP hedged) tracks the Bloomberg Barclays World Government Inflation-Linked Bond All Maturities Total Return index and charges 0.07%
Short Dated Global Index-Linked Bond index fund (GBP hedged) tracks the Bloomberg Barclays World Government Inflation-Linked Bonds 1-10yrs index and charges 0.07%
Emerging Market Local Currency Bond index fund tracks the JP Morgan GBI-EM Global Diversified index and charges 0.1%.
