Fund charges

Our charges vary between the funds that your clients can invest in, and then by the class of share they might hold.

For each fund, your clients 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.

New reduced annual charges – effective 15 February 2021 

We’re continuously seeking ways to offer better value to you and your clients.

From 15 February 2021 a range of M&G funds will benefit from a reduction in our annual charge. This reduction in our charges is part of our commitment to provide ongoing value for money to your clients.

Details of our new annual charges

Click on the link below to find the new charges for our funds effective from 15 February 2021. Please note this will only work on your pc or laptop – unfortunately it is not compatible on mobile or tablet.

View details of the annual charge reduction on our funds

You may notice that the reduction in charge isn’t the same across all our funds. That’s because the initial results of our pricing review weren’t the same for every fund. Our analysis identified that the reduction for some funds should be higher, and some funds were already offering better value for money than others, so didn’t need any or the same level of reduction.

A review of our charges, performance, service and products

We haven’t just looked at charges. In order to offer better value to our customers, we’re undertaking a full review – looking at our charges, our performance, our service and our product range, to ensure we are offering your clients value for money.

In addition, we carried out our first annual value assessment which we published in July. 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. 

What is the Ongoing Charge?

The ongoing charge consists of an annual charge and extraordinary expenses.

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 diagram below illustrates the charges covered within the ongoing charge. 

In August 2019, we grouped together most of the charges into an annual charge. This diagram also shows the breakdown of what is covered within the annual charge. Only exceptional items such as unforeseen legal and tax expenses, also known as extraordinary expenses, will be excluded from the annual charge.

As part of the changes introduced in August 2019, making charges clearer, simpler and better, M&G 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.

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 your clients 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.

What are the Portfolio transaction costs?

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:

  • Direct portfolio transaction costs - Costs incurred when the fund buys and sells investments and includes commission paid to brokers and taxes. These transactions are the result of active investment decisions made by the fund manager for the benefit of all investors
  • Indirect transaction costs - In addition to direct portfolio costs, there are indirect transaction costs caused by the fact many investments have a bid-offer spread which is the difference between the buying and selling prices of investments and their actual value (known as the mid-price). These costs are different from direct costs since there is no specific cash payment (unlike direct transaction costs) but do have an impact on the performance of the fund. Some types of investments, such as fixed income securities, have no direct transaction costs and only the indirect transaction cost is incurred. For the M&G Property Portfolio, please note that there is no market bid-offer spread on property assets

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. 

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.

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