The AIC said it will no longer publish Total Expense Ratios (TERs) on its website and will replace them with an "Ongoing Charges" figure, which will be calculated by Morningstar using a new AIC methodology.
In addition, the association is recommending to its members that they follow the new methodology when publishing an Ongoing Charges figure in their accounts, factsheets and on their websites.
Part of the rationale behind the new methodology and the term "Ongoing Charges" is that is takes into account rules likely to come in at the European regulatory level for investment companies producing Key Investor Information Documents (KIIDs).
The AIC has also taken into account the rules Oeics currently have to follow to try and ensure consistency across the two product types and allow easier comparison of competing products.
Post-RDR prospects
Many feel investment trusts could witness a surge of interest post-RDR because of the requirement of advisers to show they are looking at the "Whole of Market" if they wish to be termed independent.
Others think this potential has been over-egged and that advisers will still not favour investment trusts because of their illiquid, at times complex and lack of transparent image.
To try and conquer this lack of trust Morningstar launched an investment trust ratings system earlier this year, which it plans to expand as the year progresses, and both Morningstar and the AIC have embarked on hosting educational workshops for advisers on closed-end funds.
The AIC has also recommended performance fees are excluded from the Ongoing Charges calculation, as this mirrors the approach taken by Ucits fund and is consistent with European regulators.
Ian Sayers, director general of the AIC, said: "We are aware of growing calls for a total cost of ownership figure to be published which would include Ongoing Charges, but also the costs of advice, platforms and internal dealing costs. We believe the investment company sector has much to gain from supporting greater transparency in fund costs.
"The publication of the AIC’s methodology for Ongoing Charges is a key element in delivering this ultimate goal. While it may take some time before a consensus is reached across the financial services sector on how the other elements would be incorporated, this is an important step forward."
