The announcement follows hard on the heels of yesterday’s recommendation by the Financial Conduct Authority for fund managers to move away from annual management charges.
Daniel Godfrey, writing on the IMA blog described the proposal as a ‘radical approach’ that “will tell investors, in pounds and pence per unit, how much profit (or loss) they’ve made and how much it has cost them.”
According to Godfrey, because the figure will be drawn from a fund’s independently audited annual report and accounts, consumers should be able to view it as accurate and comprehensive.
He said the measure “covers every penny spent by the fund” and includes both the manager’s fees and all other operational costs.
“It also includes all the dealing costs and stamp duty paid when an investment manager buys and sells holdings in the fund’s portfolio (known as “transaction costs”),” he added.
While this figure will encompass all the various costs, the raw data will be published in the fund’s annual report, which will allow anyone interested to see how the figure was determined.
“Our next step will be to develop a common standard for the calculation of “Portfolio Turnover Rate”, a measure that tells you how actively the investment manager buys, sells and holds shares,”
IMA launches single pounds and pence fee plan
The IMA’s pounds and pence single fee plan has been formally ratified by the Financial Reporting Council.
