Old Mutual Global Investors (OMGI) is set to fix the ongoing charges figure (OCF) across its fund range.
From January 9, the group will fix the expenses levied above the annual management charge meaning investors will know exactly what the OCF will be in the following year.
This contrasts with the current industry norm, in which the advertised OCF is either an estimate or based on the past year’s charges.
OCFs tend to fluctuate from year to year because the figure includes variable charges, such as those linked to administration.
OMGI said the OCF on its funds will be fixed “based on forecasted operating costs” and the fixed price will be reviewed every year.
The firm said the changes were “broadly consistent with the actions taken by other major investment houses”.
Investment Adviser revealed in October that Somerset were considering introducing a fixed total expense ratio (TER), which includes dealing costs, on Edward Lam’s £763m Somerset Emerging Markets Dividend Growth fund.
OMGI said as a result of the changes to its charging structure, around 60 per cent of fund share classes will see a reduction or no change in their price, so 40 per cent are projected to see an increased price.
The fixed expenses will vary between the different funds, from 0.085 per cent on the Old Mutual Gilt fund to 0.3 per cent on some of the WealthSelect funds.
