Where am I? 
Home Better Business Charging
Categories: Charging| Investment General
Topics: Fidelity
The asset management industry must create an industry standard to bring greater transparency to investment charges, Fidelity Worldwide Investment said today.
Investors should be able to see the total cost of owning a fund - including fund, distribution and stock dealing costs as well as platform administration charges - and compare different products, it said.
Gary Shaughnessy, Fidelity's UK managing director, said: "[We urge] all areas of the asset management industry to work together to make it easier for investors to see the total cost of investment.
"We believe that the charging structure on funds should be simple, easy to understand and not discriminate against smaller investors."
Analysis of the most popular UK funds available through FundsNetwork, Fidelity's investment supermarket, suggests that, outside the initial cost of investing in a fund in the first instance, the average total cost of owning a typical actively-managed £10,000 investment is £16.67 per month or £200 (around 2%) a year.
Shaughnessy said: "We are seeing selective and partial ‘Ryanair' pricing start to emerge which runs the risk of misleading investors about the real costs they are paying.
"A consistent way of showing charges is essential to restoring investors' trust in the industry and encouraging them to feel confident to save for the future.
"What will really help investors is a transparent and standardised cost breakdown in pounds and pence."
| Charge | Typical amount for an actively-managed fund, expressed in % and £ for £10,000 investment | Typical amount for a low-cost active fund, expressed in % and £ for £10,000 investment | Typical amount for an index tracker fund, expressed in % and £ for £10,000 investment |
| Investment management charge | 0.75% (£75 a year or £6.25 a month) retained by fund manager | 0.40% (£40 a year or £3.33 a month) | 0.1% (£10 a year or 83p a month) |
| Other service and administration charges (eg legal and custody) | 0.14% (£14 a year or £1.17 a month) passed on to service providers | 0.2% (£20 a year or £1.67 a month) | 0.2% (£20 a year or £1.67 a month) |
| Cost of advice or distribution | 0.5% (£50 a year or £4.17 a month) | 0.5% (£50 a year or £4.17 a month) | Nil (for Moneybuilder UK Index but advice or distribution charges may apply in other cases and are often excluded from illustrations) |
| Platform administration charge | 0.25% (£25 a year or £2.08 a month) | 0.10% (£10 a year or 83p a month) | Nil (for Moneybuilder UK Index but platform charges may apply in other cases and are often excluded from illustrations) |
| Stock Market dealing costs and Government stamp duty | 0.36% (£36 a year or £3 a month) | 0.25% (£25 a year or £2.08 a month) | 0.09% (£9 a year or 75p a month) |
| TOTAL ANNUAL COST OF OWNING A FUND (based on investment of £10,000) | 2.00% (£200 per year or £16.67 a month) | 1.45% (£145 a year or £12.08 a month) |
0.39% (£39 a year or £3.25 a month) |
| Share | |
| Comment | Fidelity demands action on misleading 'Ryanair' fund charges |
More charging news
Email alerts
Recommended reading
Categories
Topics
Comments
Dealing costs
What are included within the "Stock Market dealing costs"? Does that figure include the market-maker's spread and does it include the cost of price movement when a large fund buys or dumps stock? I doubt it but all part of the true cost.
Posted by: PeterD
Cost of advice misleading
Perhaps I am missing something here but I rather thought that one of the better RDR ideas was that the cost of advice was separately agreed between the customer and the adviser. So why is Fidelity implicitly telling customers they must not pay for advice for an index tracker? I can't speak for anyone else but I firmly believe that it is just as important to give advice on an index tracker as it is on any other type of investment. A recommendation to buy, hold or sell a tracker might include the fact that it is a much cheaper way of getting exposure to a particular market and as a matter of routine I would compare an actively managed fund to a tracker to see if the manager was earning his fee. Who is Fidelity to say the customer should NOT pay for THAT advice. The table that Fidelity is suggesting in this article is EXTREMELY misleading and should either omit the line on advice entirely or, much better, show the same amount for each fund. As that nice Mr Tebbit used to say, "On your bike".
Posted by: Michael Both
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
Two months left before the ‘real RDR deadline’ – are you compliant with the required professional...
Viewpoints
2012 marks a watershed for the Life companies, fund managers, banks and advisers who service...
sponsored by
Implication?
This statement from Fidelity appears to imply that Ryanair does not fully disclose their charges. I wonder if Michael O'Leary will take exception?
Posted by: Green Eyed Monster