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HEAD-TO-HEAD: JP Morgan versus Legg Mason

FSA compares two global fixed income products: the JPM US Aggregate Bond Fund and the Legg Mason Western Asset Global Bond Trust.
by Rupert Walker

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Fees 

The JP Morgan fund’s retail share class ongoing charges figure (OCF) of 1.36% is significantly more than the 0.85% annual total expenses fee exacted by the Legg Mason product.

“There are fewer moving parts involved in managing the Legg Mason fund, with its total focus on sovereign bonds,” said Poole.

“The more complex investment mandate and style, in particular allocations to mortgage and other asset-backed securities, requires more resources,” he added.

Nevertheless, OCFs in the US dollar fixed interest category (to which the JP Morgan product is assigned by FE Fundinfo) available to Singapore retail investors range between 1.81% and 0.46%, with a median charge of 1.05%, so the JP Morgan fund looks quite expensive compared with its peers.

In contrast, the median fee in the global fixed income category (the Legg Mason product’s peer group) is 1.20%, considerably higher than the Legg Mason fee.

In general, Poole believes that more asset management firms will eventually have to cut their charges to the relatively low levels charged by European and especially US distributed funds, as competition increases and the fee disparities between Asia and other fund centres gain more critical attention.

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