Understanding fund fees
Like any other investment, when you’re investing in funds it’s important to understand the fees involved and how you’ll be charged. Some charges are made to the fund manager for running the fund, while others are paid to the broker or provider who looks after your holdings / account. We’ve set out how they work below.
Fees charged by the fund manager
The fund’s Ongoing Charges Figure (OCF) gives the ongoing costs charged to the fund per year, and deducted from its value. This includes the fund managers’ Annual Management Charge (AMC) as well as other costs of administering the fund. The AMC is the fee you pay to the manager for their expertise in managing the investments. It’s calculated into the price of the fund daily so no separate charge is made to you.
You may also have to pay an initial charge to the fund manager. This can be up to 5.5% of the total amount you’re investing and it's taken off the money you pay in. To save you paying this up-front fee, we've negotiated with managers so that no initial charges are payable on any of the 2,000 funds available on our Funds Market.
To make sure you know what the charges are likely to be, as well as understanding the objectives and risk and reward profile of the fund, you must read the Key Investor Information Document (KIID) for the fund.
Fee charged by Investment Service Providers
An investment service provider charges a fee for the administration of your fund investments. Recent changes to regulations mean that an investment service such as ours must charge you directly for the administration services we provide. We’ve therefore introduced the Fund Administration Fee.
Our Fund Administration Fee is charged at 0.35% per year subject to a minimum charge of £35 per year per account. The fee is calculated on the daily value of eligible fund holdings, on the first £500,000 of holdings. The fee is charged quarterly.
Find out more about how the Fund Administration Fee is calculated, including some worked examples here