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Retail Oeics more expensive than unit trust counterparts

Oeics are more expensive for retail investors than their unit trust counterparts according to a survey by research group Fitzrovia.


The research found retail Oeics funds generally have a much higher Total Expense Ratio of 1.72 per cent compared to 1.48 per cent for unit trusts.


The TER is calculated as the effect on fund performance when the true cost of annual charges including administration, custody, audit and legal costs are determined. These costs are additional to the normally disclosed management fees.


The survey of 1002 unit trusts and 120 Oeics found that overall the average Oeic generally has a slightly lower TER than the average unit trust, due principally to their lower management charges.


But closer scrutiny reveals the overall figures for Oeics are distorted by the relatively low cost of institutional funds when compared to retail funds.

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