Enhanced Disclosure of Fund Charges
Aviva Investors actively promotes the understanding of the nature of charges, costs and transparency, which is in line with Investment Management Association (IMA) recommended practice.
When investors use funds to invest in financial markets they are charged for the running of those funds. All such fund charges are disclosed in a standard format in the Key Investor Information Document (KIID) and additional information can be found in the Supplementary Information Document.
In common with other types of investors in financial markets, a fund incurs costs as a necessary part of buying and selling underlying investments in order to achieve its investment objective. These transaction costs affect a fund’s investors in different ways depending on whether they are joining, leaving or continuing with their investment in the fund.
The fund charges table in the link below and the following wording explain what these charges may be and state the charges applicable to our funds or where details can be found.
|Maximum entry charge This is the maximum charge that the manager may take from your money before it is invested. For example, if you invest £1,000, an entry charge of 5% means £950 of your money is used to buy shares/units in your chosen fund. The charge is used to cover the costs of setting up your investment. For dual priced funds, the initial charge is included in the price you pay to invest, and makes up part of the bid-offer spread. In most cases the entry charge is currently discounted in full except if investment is made via an execution only broker, in which case, the entry charge will be 1% or less..|
|Exit charge Some fund managers choose to take a charge when you sell your investment instead of or in addition to an initial charge in order to cover their costs. Aviva Investors do not operate any exit charges on our funds currently.|
|Ongoing charge This figure is a percentage of the fund value and is based on actual charges for the previous year, but can be an estimate of upcoming expenses where this provides a better indication of the expected charges in the fund. It covers all aspects of operating the fund during the year, including fees paid for investment management, administration and the independent oversight functions. It excludes performance fees and portfolio transaction costs. Where the fund invests in other funds it includes the impact of the charges made in those other funds.|
|Performance fee Most of our funds do not have a performance fee. Details of any performance fee are given in the Key Investor Information Document for the fund. Full details of how the performance fee would be calculated can be found in the fund's Prospectus, where applicable.|
Portfolio Transaction Costs.
Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them for the following reasons:
- Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager’s investment decisions in improving returns and the associated costs of investment. Historic transaction costs are not an effective indicator of the future impact on performance.
- Transaction costs for buying and selling investments due to other investors joining or leaving the fund may be recovered from those investors for large trades, see the Prospectus for further information.
- Transaction costs vary from country to country.
- Transaction costs vary depending on the types of investment in which a fund invests.
- As the manager’s investment decisions are not predictable, transaction costs are also not predictable.
Portfolio transaction costs include broker commission, taxes and dealing spread. These are explained below
Broker commission The fee paid to a broker to execute a trade, based on number of shares traded. On average, over the last three financial years the fund(s) incurred broker commissions as shown in the table below, as a necessary part of buying and selling the fund's underling investments in order to achieve the investment objective.
Taxes These are taxes incurred when purchasing certain investments (eg Stamp Duty on purchases of UK equities)
Dealing spread The dealing spread on the single priced funds represents the difference between the buying and selling price of the underlying investments. Some investments have no separately identifiable transaction costs: these costs form part of the dealing spread. Dealing spreads vary considerably depending on the transaction value and market sentiment. The dealing spread on the dual priced funds represents the difference between the issue price (the price at which net contributions take place) and the cancellation price (the price at which net withdrawals take place) The estimated average dealing spread for each fund is shown in the fund charges table as a percentage of the transaction value.
For funds where we operate a dual pricing methodology, where the fund is experiencing net contributions these take place on an offer pricing basis and net withdrawals take place at the bid basis. On an offer basis the prices for buying and selling are calculated by reference to the buying prices of the underlying investments, creation price. On a bid basis the buying and selling prices are calculated by reference to the selling prices of the underlying investments, the cancellation price. This means that, when investments are bought or sold as a result of other investors joining or leaving the fund, your investment is fully protected from the costs of these transactions.
For funds where we operate a single pricing methodology we reserve the right to charge a dilution levy (Investor Protection Fee) to protect your investment from the costs of buying or selling investments that result from large investors joining or leaving the fund. The amount of any such dilution levy is calculated by reference to the estimated costs of dealing in the underlying investments, including any dealing spreads, broker commissions and stamp duty. When we impose a dilution levy on a particular investor or group of investors, this is paid into the fund and helps to protect your investment from the costs of the resultant transactions. For details of dilution levies applied in a fund historically, and on what values, please see the relevant Prospectus.
For further information on the Investment Management Association guide on charges and costs please click here.