The Association of Investment Companies (AIC) is urging members to stop publishing total expense ratios (TERs), instead recommending closed-ended funds disclose ‘ongoing charges' to give investors a greater level of clarity.
The AIC said publishing ‘ongoing charges' would ensure trusts are meeting the requirements of European legislation, which states they must produce Key Investor Information Documents (Kiids).
Under the new charging structure trusts will be required to disclose all charges, but the AIC is recommending performance fees are published separately.
Ian Sayers, director general at the AIC, said the change would enable investors to make easier comparisons between trusts and open-ended funds in the run up to RDR.
"Having one single methodology for calculating ongoing charges will help to reduce inconsistencies and aid comparability for investors and advisers both between investment companies and between investment companies and open-ended funds," he said.
"We are aware of growing calls for a total cost of ownership figure to be published which would include ongoing charges, but also the costs of advice, platforms and internal dealing costs.
"We believe the investment company sector has much to gain from supporting greater transparency in fund costs and the publication of the AIC's methodology for ongoing charges is a key element in delivering this ultimate goal."
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