How Much Does My Fund Cost?

INVESTMENT TOOLS: Investors now have an easier and more meaningful way to compare fund fees on

Holly Cook 29 August, 2014 | 9:24AM
Facebook Twitter LinkedIn

As of today, August 21st 2014, you will notice some changes to how we display the fees you incur when investing in a fund. Whereas we used to highlight the Total Expense Ratio (TER) we are now putting the focus on the Ongoing Charge (OGC).

The Ongoing Charge represents the costs you can reasonably expect to pay as an investor from one year to the next, under normal circumstances. Many investors will be used to looking most closely at the Annual Management Charge, but neither this charge nor the Ongoing Charge includes the performance fees incurred so neither is perfect. However, the Ongoing Charge does represent a more accurate cost of fund ownership as it encompasses the fund’s professional fees, management fees, audit fees and custody fees.

A quick overview of each fund’s fees, including the Ongoing Charge, is displayed on every Fund Report on on both the Overview tab and the Fees tab.

In addition, all of our fund-filtering tools, such as Fund Quickrank and Fund Screener, can now be filtered by Ongoing Charge. For example, if you wanted to screen for funds offering exposure to European equities that have earned a Gold rating from Morningstar analysts and carry an Ongoing Charge of less than 1%, you can do so. (For the curious, you’ll find just one fund that meets all these criteria.) Morningstar analysts also discuss a fund’s fees as part of their rating investigation; on the Morningstar Research tab, they’ll explain how the fee is constructed and how it compares to those of its peers.

At Morningstar, we think Ongoing Charges are a helpful way to compare costs across all types of funds and so today we’ve introduced them on our website for funds (OEICs and unit trusts) and ETFs. We introduced it for investment trusts some time ago, in accordance with recommendations from the industry body the AIC.

We’re working with the fund industry to provide further improvements in fee transparency, and though the Ongoing Charge isn’t a perfect measure it’s a good step in the right direction and makes comparison across different fund types easier and more meaningful.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures