Total expense ratio and the TAC
Written on 10/08/2018

It is shocking that after 29 years of regulation we have no consistent definition of total expenses in fund management.  

What is so difficult about agreeing the charges? We ask. And we continue to sound exasperated and shocked until we look into the complexity of fund management. I attach a guide issued by Quilter’s about Total Account Cost. 

As they point out costs such as the spread on funds and shares, vat on dealing, Stamp Duty, initial and ongoing fees on underlying OEICs and dealing charges all make the number almost impossible to pin down in a forecast. Perhaps the forecast is the problem, and firms should report a consistent number at the end of each year, at least inside funds. Another problem with funds is the allocation of marketing expenditure across the stable of funds. No one advertises the dog fund, but the star fund that is promoted doesn’t exactly take all the costs either.

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