Fund Fee FAQs
What is an OCF?
The Ongoing Charges Figure is the annual percentage a fund deducts for management and running costs, skimmed from the fund's value daily. Typical actively managed funds charge 0.6% to 1%; index trackers charge 0.05% to 0.25%. It excludes transaction costs and your platform fee, which stack on top of it.
How much difference does 1% really make?
Enormous, because fees compound against you every single year. On £100,000 growing at 7% for 30 years, a 0.15% total cost leaves roughly £730,000, while 1.25% leaves about £535,000. Identical market returns · but nearly £200,000, a quarter of the potential gain, disappears in charges.
Do expensive funds perform better?
On average, no. Most long-run studies find the majority of active funds underperform their benchmark after fees over 10+ years, and past winners rarely stay winners. Cost is the most reliable predictor of relative performance · low fees are the only edge an investor can guarantee in advance.
What platform fees should I expect?
UK platforms charge either a percentage (commonly 0.25% to 0.45%, sometimes capped for ETFs) or a flat fee (£100 to £200 a year). Percentage fees suit small pots; flat fees usually win once you hold £50,000 to £100,000. Watch dealing charges and exit fees too.
How do I cut my investing costs?
Prefer index funds or ETFs with OCFs under 0.25%, pick a platform whose structure suits your pot size, avoid layered fund-of-fund charges, and trade rarely. Cutting total costs from 1.25% to 0.35% is mathematically identical to adding ~0.9% of guaranteed annual return.
For informational purposes only · Not investment advice · Projections assume constant growth and fees; real returns vary and can be negative · OCF excludes transaction costs and one-off charges · Past performance does not guarantee future results