Baker Gladstone & York Ltd.

Rathbone House
22-26 Tanfield Road
Croydon
CR0 1AL
United Kingdom

E-mail

info@bgyifa.com

Phone number

020 8240 4487

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Illuminating fund fees

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When comparing fund costs, there are a range of different figures investors need to look out for.

Investor factsheets can contain a mix of acronyms, but the most important figure is the OCF – the Ongoing Charges Figure. The OCF covers the annual management charges on the fund (also known as AMCs), as well as a variety of other operating and administration costs. All regulated funds now must display their OCF. This charge is applied to the total value of your fund, not just your contributions, which makes them a useful way to compare charges between funds.

The OCF supplanted the Total Expense Ratio (TER) in 2012. The TER was broadly similar, but the OCF includes additional research charges. However, neither of these terms include the costs of buying and selling assets within the fund, such as stockbrokers’ commissions, dealing charges and stamp duty.

Transaction costs can vary significantly from fund to fund, partly depending on how frequently the manager buys and sells shares. Since January 2018 fund managers have been obliged to include information on their transactional costs alongside the OCF.

Transactional costs are projected based on previous actual dealing charges and can be a useful way for investors to understand what the additional costs might be. These fund charges won’t include any platform costs, nor initial charges.

If you would like to discuss your investment choices further, please get in touch.

The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

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