St. James's Place is set to expand its offering with "low-cost passive-style" funds as it attempts to fend off ETF giant Vanguard's entry into the UK advice market, the Financial Times has reported.
The firm, which suffered a tough 2019 in both the national and trade press due to criticism of its fee structure, how its advisers are incentivised and allegations of questionable practices from some of its adviser network, is in talks with asset managers to launch a range of "passive plus" funds, which will enjoy the same low fees as tracker funds without replicating the entire index.
Alongside Vanguard, SJP also face competition from Lloyds and Schroders, who teamed up last year to launch Schroders Personal Wealth, which they claim charges new clients less than half of what they pay at SJP.
These rules-based funds are due to be launched over the next 12 months and will be low-carbon strategies overseen by Rob Gardner, co-founder of pensions consultancy business Redington, who joined SJP in 2019
Gardner told the FT that the funds sought to achieve a "trade-off" between a low carbon footprint, a low tracking error and low fees, but insisted the firm did not want to engage in a race to the bottom.
"Ultimately, this is about client outcomes. "Our key focus is on creating high-capacity, low-carbon solutions as part of our broader commitment to responsible investing."
He added that the firm's strong asset growth over the past few years has made such a passive push necessary to be able to accommodate client wealth.
"The bigger you get, the more you have to move to a core-satellite approach using passive building blocks combined with active exposure.
"Active management does not scale infinitely. We might reach £250bn in assets in the next few years, so adding capacity is important."