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Investor Education > Managed Funds > Managed funds costs

HOW MUCH DO MANAGED FUNDS COST?

When investing, it is important to be aware of the fees you are paying as a small difference in fees and costs can have a substantial effect on your long-term investment returns. The Australian Securities and Investments Commission (ASIC) have a set of recommended guidelines for disclosure of fees which are widely used within the industry. Under the guidelines, the cost of purchasing a fund is disclosed in the one place in the product disclosure statement with an example showing fee amounts in both percentage and dollar terms.

The following are some of the more common fees that may apply when investing in managed funds:

MANAGED FUND COSTS

 

FEE WHAT IT'S FOR
Contribution fee An entry fee will be charged by most managed investments on every investment you make into the fund (includes initial, additional and regular investments).
Withdrawal fee When you make withdrawals from the fund. Many managed funds only charge this fee where you have chosen to invest in their ‘nil entry fee’ option. Often the fund manager will also chrge higher management fees when you choose the nil entry fee option.
Ongoing fees This includes administration, management expenses, expense recover and other fees charged by the fund manager for managing your investment. Ongoing fees are often referred to as the Indirect Cost Ratio (ICR) or Management Expense Ration (MER).
Performance fees Some managed funds charge a performance fee in addition to management fees. Generally performance fees are calculated as a percentage of outperformance above a disclosed benchmark.
Buy/sell spread A buy/sell spread may apply when buying or selling units in a managed fund (including when switching between funds). This fee covers the transaction costs incurred by the fund when buying or selling investment fund assets.
Adviser service fees A fee charged by a financial adviser for their services that is deducted from your investment. This can be either as a dollar based or percentage based fee.

 

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