rplan always show the Ongoing Charge (or the Total Expense Ratio where not available) whenever a fund is listed. This gives you a better idea of the costs associated with your investment. There are a number of components to the cost of running a fund.

Cost Type Breakdown Cost range

Annual Management Charge (AMC)
This is charge normally quoted in the literature of the fund, and is deducted from the fund by the fund manager.

 

Investment Management
This is the element of the AMC kept by the fund manager for managing and administering the fund.

0.10 - 0.75%

Ongoing Charge
The Ongoing Charge (or the Total Expense Ratio where the Ongoing Charge is not available) includes some other expenses that are charged to the fund, but that are not included in the quoted Annual Management Charge (AMC).

 

Underlying Investment Charges
This represents the costs of managing the assets that the fund invests in. This is normally only significant in multi-manager funds (where the cost of holding the assets that the fund invests in are high).

0.10 - 0.75%

 

Other Expenses
There are a variety of other expenses that can be charged to the fund e.g. registration fees, depositary fees, custody fees, audit fees, FCA fees, price publication fees and report and account production costs.

0.10 - 0.30%

Trading Costs
There is a trading cost each time the fund manager buys or sells an asset in their fund. The trading costs can be estimated from the Portfolio Turnover Rate (PTR) which loosely represents the percentage of the fund's holdings that have changed over the past year.

 

Trading costs
This includes the stamp duty and dealing costs of all the purchases and redemptions made by the fund manager. For a multi-manager fund this could be as high as 2% of the assets bought or sold. For equity funds, the figure would be approximately 1.4%, and for bond funds 0.3% or less. If the fund is turning over a significant portion of its holdings (as represented by the PTR), this could prove a significant drag on the fund performance. These costs may be offset by good returns.

0.2 - 1.00%

Provider Fees
This is a separate charge taken from your service provider and/or platform.

 

Service Fee
This covers the ongoing servicing of your account, and is paid to the adviser or broker that you originally bought the fund through. The structure in which your service fee is charged will vary depending on the provider - some charge a percentage fee, other fixed fees and/or dealing fees, or a combination of both.

0.15 - 0.60%

 

Platform Charges
This covers administration services such as the ISA plan management, record keeping etc. In most cases, the platform charges are included in the service fee.

0.05 - 0.40%