Investment professionals have responded with surprise to the Office for National Statistics' (ONS) inclusion of reductions in the initial charge levied by unit trust providers in its assessment of inflation for July.
As FTAdviser had previously reported, the ONS stated UK inflation had risen slightly to 2.5 per cent in July.
In its report outlining the factors that were behind keeping inflation down, the statistics agency listed the "removal of initial charges for investment in some unit trusts" as a contributor.
The ONS had only listed three sectors of the economy in its list of products that were disinflationary.
This has caused considerable surprise to a range of investment professionals contacted by FTAdviser because unit trusts typically do not have initial charges.
Trust factsheets typically mention an initial charge number, but investors who use any of the main platforms, or whose adviser uses such a platform, have the initial charge discounted to zero.
Investors usually only pay the initial charge if they buy the fund directly from the investment provider, or if they buy a fund that is not being marketed.
Ben Yearsley, a director at Share Capital, said: "This is a silly season stat, but a very funny one. What it does show is that unit trust providers, who get a lot of stick about charges, have actually brought charges down.
"An investor in unit trusts is much better off now than they were, and the industry doesn’t always get the credit for that transparency."
James Tucker, inflation statistician at the ONS, said the agency, when compiling the data, must use the advertised price for a product, so the unit trust initial charge is included in the data, though not usually paid.
Mr Tucker said the reference was made in the statistical report this month because of a 'lack of significant news elsewhere'.
The report said the category of the data that includes unit trust charges, called financial services otherwise categorised (therefore includes unit trust charges and others), accounted for 0.03 per cent of the entire data set from which inflation was calculated.
Jason Hollands, managing director for business development at Tilney Group, noted that unit trust sales in the UK have been in deep decline this year.
But Mr Tucker said the weightings in the index of "basket of goods" on which inflation is calculated were set at the start of 2018 and so wouldn’t reflect the decline in sales of products over the past eight months.
david.thorpe@ft.com
