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Press Release

Thursday 20 September

IMA ISSUES FINAL INDUSTRY GUIDANCE FOR ENHANCED DISCLOSURE OF FUND CHARGES AND TRANSACTION COSTS

The Investment Management Association (IMA) has today issued industry guidance on enhanced disclosure of fund charges and transaction costs incurred by UK-authorised funds.  The guidance aims to help consumers better understand fund charges and costs and is intended to sit alongside and complement existing regulatory requirements.  IMA today also launches its new website guide to charges and costs.      

The guidance follows a consultation launched in June, responses to which were received from members and Which?.  A feedback statement has been published, summarising those responses and indicating how the guidance has been amended as a result.     

Members are asked to provide the additional disclosures on their websites by the end of March 2013.  

The guidance suggests firms go above and beyond the current European regulatory requirements by providing investors with the following information on their websites for each of their funds:

  • Enhanced disclosure of transaction costs by providing three-year average figures for broker commissions and transfer taxes (e.g. stamp duty) as a percentage of the fund’s net asset value. Information on the significance of these costs and the bid-offer spread should also be provided.

  • The ongoing charges figure (OCF) always to be disclosed instead of the annual management charge (AMC), because the OCF provides the most comprehensive picture of the charges being deducted from the fund and is in line with the new Key Investor Information Document (KIID). Where the AMC is stated, the OCF should be given equal prominence.

  • Clearer explanations on the purpose of all charges and costs - entry, exit, ongoing, performance and transaction - through separate disclosure notes.  Recommended wording is provided.

Richard Saunders, Chief Executive of IMA, said:

 “Funds offer investors a way of accessing the markets more cheaply than if they were to invest directly, allowing investors to benefit from economies of scale.  This makes it all the more important that charges are made as transparent as possible.

“IMA’s new guidance is intended to benefit all investors and in particular, those who want more detailed information about fund charges and costs.  It offers more accessible disclosure of transaction costs, which are explained and disclosed separately because of their difference in nature from fund charges.   

“The guidance has been developed with the input of firms managing over 50% of retail funds under management and those firms remain committed to following it.”

The guidance is in addition to existing mandatory European regulatory requirements.  However, it cannot alter or add to the disclosures that must be made in the new Key Investor Information Document (KIID), which all UCITS must now provide.

-ENDS-

For further information please contact:

Mona Patel, Head of Communications
mpatel@investmentuk.org
020 7831 0898 or 07834 089332

Christina Bridge, Press Assistant
cbridge@investmentuk.org
020 7831 0898
 
About the Investment Management Association

  • The IMA is the trade body for the UK's £4.2 trillion asset management industry (retail and institutional) which is one of the world's leading investment management centres.
  • Our role is to represent the interests of the asset management industry to government and regulators both in the UK and internationally.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.

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