The hidden cost of active management

Most investors are aware that a fund’s annual management charge (AMC) doesn’t include all of its costs. Other expenses, such as administration costs, custodial fees for holding the fund’s investments and legal and audit fees, are usually levied on top of the AMC.

For an actively managed fund, this can easily add another 0.15-0.25 percentage points to their expenses.

But you may not realise that even the ongoing charge figure (OCF) – also known as the total expense ratio (TER) – that includes all of these will still understate the true costs of your funds. That’s [...]

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