Can you imagine buying your shopping for a known price but leaving your credit card at the supermarket so that they can deduct more later? Well that’s pretty much what happens with an investment manager. They tell you an annual management fee (AMC) usually between 0.5% – 1.5%, and then if you read the small print you’re told about the total expense ratio (TER).
The average TER on a UK fund is 1.65%. You’d think the word “total” would represent the total cost, however it doesn’t include trading costs such as stamp duty. All of which are paid out of your money. Research shows the unofficially titled “total cost of ownership” (TCO) is around 3% per year. That can be a big handicap to your plans when compounded over a number of years.
Ask us to check your funds; we’ve just saved another Morley client @ £12,000 in avoidable fees over a 10 year period. You could be retiring earlier than you think!