For each fund, you will pay an ongoing charge (which consists of an Annual Charge and extraordinary expenses) plus a share of portfolio transaction costs (the costs incurred when funds buy and sell investments). Please see below for an explanation of both costs.
There are no extra charges or hidden costs, for example there are no entry or exit charges on your investment.
As a Direct customer there are several ways for you to buy (invest in) M&G OEIC (Open-Ended Investment Companies) funds. Figuring out which way works for you may involve giving consideration to:
Our third annual assessment of the value provided to investors in each of M&G’s UK-based funds was published on 28 July 2022. It was designed to help you to see whether M&G’s charges are justified in the context of the overall service we deliver. You can find a link to our Annual Value Assessment report on the Annual Value Assessment page.
We will continue to keep you up to date on further improvements we make for our investors as a result of the findings from our Annual Value Assessment.
The ongoing charge consists of an Annual Charge, extraordinary expenses and underlying charges for closed-ended funds, such as Investment Trusts and Real Estate Investment Trusts.
The ongoing charge is mostly, if not exclusively, the Annual Charge paid to M&G to cover all aspects of operating the fund for one year.
The ongoing charges figure is calculated in line with regulatory rules and guidance that apply to all funds that produce a Key Investor Information Document (KIID). This document is intended to help investors understand the impact of charges on their investment each year and to compare the level of those charges with the level of charges in other funds.
If you are invested in the M&G Property Portfolio, the Annual Charge will only contain costs of running the fund. Expenses related to managing the properties within the fund will be disclosed separately. This does not change the overall amount you pay to invest in the fund, but it will help you to compare costs more easily with other property funds.
We also apply discounts to the Annual Charges on our larger funds based in the UK, to share cost savings that occur from economies of scale with our customers. Therefore, the larger the fund is – in other words, the more money invested in it – the lower the relative proportion of fixed costs of administering and managing it. View our charges.
The discount applies as follows. For every £1 billion of a fund’s net asset value, a discount of 0.02% will be applied to that fund’s Annual Charge (up to a maximum of 0.12%). We will assess the size of your fund, and therefore whether it qualifies for any discount, on at least a quarterly basis.
To see what you might pay for the funds you are interested in, click on our charges calculator below.
Here is an example to illustrate how it works. If the Annual Charge on a fund is 1.20% before any discount and it has £1.8 billion in assets at the end of the first quarter of the year, a discount of 0.02% will apply and the net Annual Charge will be lowered to 1.18% going forward, applicable as soon as practicable after the start of the second quarter.
If the fund’s assets swell to £2.1 billion at the end of the second quarter, the discount would rise to 0.04%. If the fund then shrinks back to £1.8 billion by the end of the third quarter, the discount would revert to 0.02%. This example is illustrated below.
It should be noted that discounts will not be removed if a fund’s assets fall just below a given threshold. Instead, there will be a buffer of £100 million (£0.1 billion). So if, using our example above, the fund’s assets shrank from £2.1 billion to £1.95 billion by the end of the third quarter, it would fall within this buffer and the discount would remain unchanged at 0.04%, rather than revert to 0.02%. In the case of the largest funds, where the relevant threshold is £5 billion or £6 billion, this buffer will be £200 million (£0.2 billion). To be clear, there is no corresponding buffer when a fund’s assets rise above a given threshold that triggers a discount (or further discount) on the Annual Charge.
The transaction costs are the costs incurred when buying or selling underlying Investments. These are made up of direct transaction costs and indirect transaction costs:
For more information on the charges applicable to each fund, please refer to the relevant KIID. You can also refer to the Costs and charges illustration which contains information on the costs applicable to your chosen share classes. Both these documents are available from within our Fund Centre.
The Investment Association (IA) has produced an independent guide to costs and charges, which you can view on their website. Please note this will open in a new window.