22/01/18

Fund managers’ fees outed as Mifid II disclosure rules take effect

(Money Marketing) -- Some fund managers’ costs have been shown to increase at least two times beyond the ongoing charges figure, as Mifid II rules around fee disclosure take effect.

According to research by the Financial Times and the Lang Cat, the cost of investing in funds run by investment giants including BlackRock and Vanguard can double once transaction fees are included alongside the OCF.

Under Mifid II, which came into force on 3 January, fund houses must disclose all charges relating to a product to investors upfront.

The Lang Cat and FT research found that once platform and performance fees are included costs can be up to four times higher than the OCF.

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The research gave the example of the Henderson UK Absolute return fund, which has an OCF of 1.06 per cent and transaction costs of 79 basis points, which takes the total cost of ownership to 1.85 per cent. However, if a platform fee is incurred – the research used Hargreaves Lansdown as an illustration – then the total cost increases to an average of 3.82 per cent.

Seven of the 20 funds analysed did not charge transaction fees.