Investment News & Views

The effect of fund charges on performance

There does not appear to be a clear linear relationship between fund charges and the gross performance generated by the fund manager (FCA Asset Management Review, 2017)

Looking at the relationship between charges and performance net of fees, the FCA found some evidence that more expensive active-funds underperformed cheaper active-funds.

The evidence suggests that there has been no clear linear relationship between the gross fund performance and the level of ongoing charges for retail active equity-funds in the UK over the period examined.

The impact of higher fees for more expensive active-funds on average has meant that they underperformed cheaper active-funds.

Annual net excess performance Vs. OCF, 2006-2015, UK LC equity funds

  • Friday, October 11, 2019

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Tomiko Evans

Chief Investment Officer

Tomiko is Chief Investment Officer of Crossing Point and holds the IMC qualification for Investment Management.