Investment charges are a hot topic right now, with a recent Financial Conduct Authority (FCA) market study highlighting the high cost of investing in actively managed funds.
I was recently asked by This is Money to answer some reader questions about how fees are charged on investment funds and what investors should look out for when investing their money in funds.
How are the fees on my investment fund charged? When I look at my investment fund documents it tells me that I pay an annual management charge of 0.74 per cent, but how is this money taken? Does the fund manager take this money out of my individual investment or deduct it from the money that's pooled in the fund overall? Is the charge paid monthly or quarterly, in advance or in arrears, or does this vary depending on the fund firm? Also when my fund quotes its performance and says it is up 7 per cent over the past year, is this measured before or after the fee?