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TERs down for second year running, says AIC

Charges have dropped in the investment sector once again, says the AIC, with total expense ratios down across the sector for the second year running.

Latest research from the Association of Investment Companies reveals that 28 per cent of investment companies have charges under 1 per cent, increasing on last year’s figure of 25 per cent.

The proportion of companies with charges under 1.5 per cent has also increased to 59 per cent compared to 55 per cent last year.

Edinburgh US tracker trust was the lowest cost AIC member, with a TER of 0.28 per cent.

Generalist sectors proved to be the lowest cost, with 62 per cent of global growth investment companies having charges under 1 per cent.

AIC director general Daniel Godfrey says: “Whilst charges should never be looked at in isolation, and can vary depending on the size and nature of an investment company, it is important not to underestimate the impact that charges can have on investment returns.

“It is extremely encouraging to see charges once again down on the previous year – the rise in markets, boosting assets under management has clearly played a role as shareholders benefit from economies of scale. Investment company boards are also clearly continuing to keep a close watch on charges. Many of the investment companies with charges under 1.5 per cent are well known and held widely by private investors, and the cost effectiveness of these trusts clearly plays a role.”

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