Every service has its price. Managed fund fees represent the
price of access to the convenience, expertise and combined buying power of the
fund. Fee structures vary, so check out the fees on your chosen fund, so you
don't get any surprises when your statement comes.
Managed fund fees buy you expert management and entry
into the market
The price of advice
Your financial adviser usually receives a payment or
commission from the fund provider when you take up a fund. These fees are
generally not an extra cost to you, and you don't avoid a commission fee if you
buy the managed fund directly from the provider. Some advisers may directly
charge fees for their services. Ask your financial adviser for details up
front.
Entry fee
Generally speaking, you can expect to pay
around 4% when joining a fund. Some funds charge an entry fee, exit fee, or
both. Check your fund's PDS carefully.
Annual management fee
Generally speaking, fund managers charge
around 2% of your investment amount per annum, depending on the fund and the
assets being invested in. This fee represents the price of the fund manager's
services and the costs of administration.
Switching fee
You may see a switching fee outlined in your Product
Disclosure Statement (PDS). This is the cost of switching from one investment
type to another within the same company's range of investments. Funds often
allow you a certain number of switches per annum at no charge. If they apply,
any charges will be deducted from your distributions.
Exit fee
When life takes an unexpected turn, you may need to
pull money out of an investment earlier than planned. Or you may simply choose
to sell up and re-invest elsewhere. In these cases, you may be required to pay
an exit fee. Some funds charge considerable exit fees, so make sure you take
this into account before you choose a fund, and before you exit a fund.
Fees in black and white
The Product Disclosure Statement (PDS) for each fund will
tell you what fees are being charged. PDSs are usually available online, or can
be sent to you free of charge.
Keeping track
You can keep track of fees and charges on your statements.
Statements may be sent quarterly, six-monthly or annually, depending on your
choice of fund.
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