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Survey shows investment trust TERs lower than for open-ended funds

The average total expense ratio for investment trusts is lower in seven out of eight sectors compared with an Investment Management Association equivalent, according to data from Winterflood Investment Trusts.

Research by Winterflood compared the TERs of the most comparable eight sectors for both open-ended and investment trusts. The research shows that, with the exception of Europe excluding UK, the TER for investment trusts was lower in seven out of the eight sectors. The data was calculated on a market cap and asset weighted basis and was taken from the latest full-year reporting periods for the funds.

Head of research Simon Elliott says: “In six of the eight sectors, the difference was greater than 25 basis points in favour of investment trusts. Although this has a relatively minimal impact in any one year, the impact over an extended period, say 10 years, is considerable.”

Martin Currie head of product development Toby Hogbin says the TER of an investment trust does not reflect the cost of trading. He says: “With an investment trust, the TER is not necessarily a reflection of the entire cost because the cost for advice and the cost of trading have not been included.”


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