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LGIM unveils single fee for retail range

Legal & General Investment Management (LGIM) has introduced a single combined fee for its retail funds to simplify charges for investors.

The new fund management fee (FMF) that kicks in today covers the costs of running the fund and replaces the ongoing charge figure (OCF) that is currently applied to the funds.

Previously, LGIM levied an annual management fee as well as administration charges, such as variable extra expenses, which were applied separately and together to form the OCF.

However some costs will not be included in the FMF, such as transaction fees, which are payable each time a fund buys or sells assets.

Honor Solomon, head of retail distribution at LGIM, says: “It’s really important that our customers understand the charges that they’re paying when investing. At the moment, there are a number of charges disclosed separately and it can be pretty confusing.

“The FMF will provide a clear and consistent measure of overall fund charges that we believe will be simpler for our investors to understand. Rather than getting distracted by the complexity of fund charges, investor focus can instead be on making the right investment decisions.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. However some costs will not be included in the FMF, such as transaction fees, which are payable each time a fund buys or sells assets.

    So still not clear then.

  2. I think this is a good development.

    Dealing costs are always going to be a function of dealing frequency, which is determined by inflows and outlfows, as well as investment or rebalancing decisions and so not necessarily always within the immediate control of the manager. Absorbing admin costs but leaving dealing costs out of the FMF seems like the fairest way forward. We have to assume that the dealing costs are competitive – I can’t see why they shouldn’t be?

    If a manager is dealing too frequently, it will show soon enough in the performance figures; net total return is what matters.

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