The end of fund management entry fees?

Many fund managers have ditched entry fees for retail investors. But not all have, says Sarah Moore, so watch out.

The asset management industry has increasingly come under attack in recent years for high fees and hidden charges. One area currently being scrutinised by the industry watchdog the Financial Conduct Authority (FCA) is the appropriateness of charging retail investors "entry fees". These fees, also known as "initial charges", are supposed to cover the cost of setting up your investment (ie, marketing and administration), and can range from 2% to a fairly staggering 10% of the money being invested.

Many fund managers have already decided not to charge an entry fee, or to waive it for customers buying directly via brokers such as Hargreaves Lansdown and TD Direct, or via a financial adviser. But this is not true of all companies, meaning those buying a fund straight from the asset manager are often hit with substantial charges before they've even made any money on their investment.

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Sarah is MoneyWeek's investment editor. She graduated from the University of Southampton with a BA in English and History, before going on to complete a graduate diploma in law at the College of Law in Guildford. She joined MoneyWeek in 2014 and writes on funds, personal finance, pensions and property.