To be fair, many fund managers incorporate these costs into the annual management charge, but some don t. Differences in fees are important, says Paul Butler, head of fund sales for Royal Bank of Canada in Jersey. Over the long term, a difference in annual charges of just 0.5 percent significantly affects fund performance and fund returns. No load funds In the US, the situation is very different. The TER is used to gauge annual costs, and does not take into account initial, performance-related, and exit fees, all of which can impact on profits.
Fees are a sensitive issue with fund managers.
In the US, there is a statutory requirement for fund providers to disclose TER information in all fund reports and prospectuses. This is regulated by the Securities and Exchange Commission, says Mr. Moulton. There is no such legal requirement for offshore fund providers to publish full fees lists. Fitzrovia looked at actively managed funds investing in key sectors Europe, the US and Global and does not, unfortunately, differentiate between institutional and retail funds. The average TER for offshore funds came out at 1.91 per cent, higher than the average UK TER at 1.54 per cent.