Fees and Charges

dunstonh

In a review of 2022 the Aviva fund outperformed the managed fund by a few percentage points but the bigger shock were the fees being charged by my IFA and Transact.  The TER on the Aviva fund of a few hundred £k is 0.5% whereas the managed fund, which is four times the size, came in at 2.08% for the year. 

Performance differences are usually mostly down to asset mix differences more than anything else.

And you shouldnt look at a year in isolation.  if the Transact portfolio is heavier in an asset that went down more in 2022 then chances are it went up higher in 2020 and 2021.   Single years in isolation is not how you decide on these things.

Reading the above comments it seems like the norm is for the fees to reduce, in percentage terms the larger the fund gets.  If this is the case can anyone give me a target TER for a large actively managed fund ?  I am considering moving the whole fund over to Aviva at this rate. 

Transact is a good platform for larger amounts.  Not so good for smaller ones.  It is also a high end platform in terms of functionality.  All things being equal, I would probably use Transact for everything as its that good (but not without quirks or negatives - no platform is perfect).     However, all things are not equal which is why you look at each case on merit.

The use of a DFM with an active portfolio is going to add charges.    I am not a fan of DFMs as they just seem to add a layer of costs without providing any real benefit.     They are pretty good when it comes to ESG investing though.

If Aviva is a personal pension/workplace pension then it will not be giving the charges in the same way that Transact will.   Pensions were not included in MiFIDII (EU directive) and dont include full disclosure of charges in the same way platforms will.   That will make a small difference but the DFM and active portfolio is the damage.  You are paying more than double what an advisory portfolio could be

Albermarle

The TER on the Aviva fund of a few hundred £k is 0.5% whereas the managed fund, which is four times the size, came in at 2.08% for the year.  

An actively managed investment fund will always cost more than a more passive investment fund, which is probably what the Aviva fund is ? 

That is separate from the fact that you will be paying an advisor charge as well. If you want to use the services of an IFA, then you have to pay and if you agree that they use actively managed funds then the cost will mount up....