Fund transactional charges

Aged

I have been drilling down to look at the charges re my pension account and I'm not 100% clear how the asset manager costs are arrived at. The 'ongoing charges' seem straightforward, but what are the 'transactional charges' all about? Does the asset manager levy a charge every time a change is made to the holding, such as buying more units or reinvesting rebates (which are miniscule sums of a few £ a time)?

Marcon

Aged said:

I have been drilling down to look at the charges re my pension account and I'm not 100% clear how the asset manager costs are arrived at. The 'ongoing charges' seem straightforward, but what are the 'transactional charges' all about? Does the asset manager levy a charge every time a change is made to the holding, such as buying more units or reinvesting rebates (which are miniscule sums of a few £ a time)?

Your pension provider should have details on their website explaining these eg https://thepeoplespension.co.uk/transaction-costs/#:~:text=Costs%20are%20incurred%20by%20investment,investment%20returns%20of%20the%20funds.

Aged

Marcon said:

Your pension provider should have details on their website explaining these eg https://thepeoplespension.co.uk/transaction-costs/#:~:text=Costs%20are%20incurred%20by%20investment,investment%20returns%20of%20the%20funds.

Yes, they tell you what the rate is, but don't explain what a transaction is. I'm just curious.

DeLaSole

Hi Aged,

I'm too new here to post links but googling Monevator transaction costs (Monevator is a good resource) will lead you to a thorough explanation.

Hope that helps.

Aged

DeLaSole said:

Hi Aged,

I'm too new here to post links but googling Monevator transaction costs (Monevator is a good resource) will lead you to a thorough explanation.

Hope that helps.

That's very interesting, thanks!

dunstonh

but what are the 'transactional charges' all about?

It came about with MiFID II in 2018 and has a bit of a joke since then.

It is a synthetic figure using a variety of calculations that can result in different outcomes.   Including a negative figure in some cases as an element of profit and loss finds its way into it.    Most people ignore it apart from on regulatory disclosures.

It is not an explicit charge.  You are not actually being charged or deducted that amount.   The intention is to give you an indication of what your share is of the charges suffered by the fund that are not included in the OCF (or TER/AMC depending on which investment universe you are using).

e.g. if it was a property fund, then the cost of cleaners would be included in the TC.  It can be the cost of buying or disposing of an asset.  

Marcon

Aged said:

Marcon said:

Your pension provider should have details on their website explaining these eg https://thepeoplespension.co.uk/transaction-costs/#:~:text=Costs%20are%20incurred%20by%20investment,investment%20returns%20of%20the%20funds.

Yes, they tell you what the rate is, but don't explain what a transaction is. I'm just curious.

If you look at the link I've given, that gives you a list of what constitutes 'transactions' and might satisfy your curiosity.

Aged

Marcon said:
If you look at the link I've given, that gives you a list of what constitutes 'transactions' and might satisfy your curiosity.

Thanks I see that, not sure that I fully understand it though. 

Aged

dunstonh said:

It came about with MiFID II in 2018 and has a bit of a joke since then.

It is a synthetic figure using a variety of calculations that can result in different outcomes.   Including a negative figure in some cases as an element of profit and loss finds its way into it.    Most people ignore it apart from on regulatory disclosures.

It is not an explicit charge.  You are not actually being charged or deducted that amount.   The intention is to give you an indication of what your share is of the charges suffered by the fund that are not included in the OCF (or TER/AMC depending on which investment universe you are using).

e.g. if it was a property fund, then the cost of cleaners would be included in the TC.  It can be the cost of buying or disposing of an asset.  

So it's a notional charge?