There are a number of costs associated with investment funds and these are displayed in various places, including the Liontrust website, factsheets, KIIDs and investment platforms. We are making changes to the way in which we show our charges, although this does not affect the amount that funds are subject to. The following explains the different charges and the changes being made to how they are displayed.
In line with regulatory requirements, Liontrust publishes information on the different costs associated with running our investment funds.
We are making changes to the way in which we show these charges, to simplify how these costs are shown and to provide greater transparency to investors.
These changes do not affect the charges applied to the funds by Liontrust and the cost of investing in the funds has not increased as a result of this change. We are updating and aligning the cost disclosures to ensure this cost is represented under one figure. We explain the changes being made, as well as the different charges applied to the funds below.
If you have any questions on this, please contact your Financial Adviser or contact us via email: Martina.Huntley@Liontrust.co.uk.
What is the OCF?
The OCF represents the combination of the following:
- Annual Management Charge (“AMC”), the cost paid to the Manager for managing the fund.
- Fixed Administration Fee (“AF”), the costs associated with the administration of the fund.
- Where applicable, the costs of underlying vehicles (this is defined below).
What is meant by the costs of underlying vehicles?
The costs of underlying vehicles refers to the cost associated with any underlying funds that your fund invests in. This cost is calculated as the Ongoing Cost1 of the underlying funds (adjusted for any rebate2 of AMC that we have negotiated with the Manager of the underlying funds). The level of the OCFs of the underlying funds invested in varies depending on the investment selection of the fund managers.
Where is the OCF used?
You will see the OCF published on our factsheets, KIIDs, Liontrust’s website (liontrust.co.uk) and it also may be used by third parties, such as data vendors and platforms, who display information on our funds.
What is changing?
Following industry guidance, Liontrust has moved to a new single cost disclosure from 30 June 2022. This will mean that the OCF will be updated to include additional vehicles such as Closed Ended Collective Investment Schemes (“CIS”)3 including Investment Trusts and therefore the OCF published may increase for some funds.
As we will highlight, the cost of investing in the funds has not increased as a result of this change and Liontrust is not charging more. The move to a single cost disclosure is to provide greater transparency to investors of the cost of funds.
What is the impact on the charges and fund performance?
We want to stress that the costs of these funds are not rising as a result of this change as the costs of Closed Ended CIS and other CIS have always been reflected in the funds’ performance.
Which funds are impacted?
This change is aligning the cost disclosures for all Liontrust Funds excluding the UK-domiciled Global Fundamental Funds.
Whilst the OCF methodology is being updated for all funds, only a small number of them will see this figure increase as a result.
What are transaction costs and are these costs included in the OCF?
Transaction costs are the costs incurred by the funds when buying and selling investments. These costs are not captured in the OCF but are instead published separately.
For more information on transaction costs, please visit the relevant prospectus.
What costs are not included in the OCF?
Transaction costs and performance fees are currently not captured in the OCF and are listed separately. Performance fees are only applicable to a small number of funds4; more information on them can be found in the Prospectus for those funds that have performance fees.
For the majority of Funds, Liontrust does not currently apply a charge for buying shares/units (initial charge) or for redeeming shares/units (redemption charge). Initial charges where applicable are also not captured in the OCF.
Why do we use closed ended vehicles in Liontrust Funds?
Closed ended vehicles such as investment trusts provide some of Liontrust’s funds with the opportunity to diversify their investments through alternative asset classes (such as infrastructure, long/short equity funds, real estate and private equity) whilst providing a more liquid alternative than investing directly in such assets given shares in closed ended vehicles may be traded.Where will I see these figures updated?
The OCF is published in factsheets, KIIDs, on the Liontrust website and certain marketing material and may be used by third parties who display information on our funds. Where the OCF is currently displayed, from 30 June these figures will be updated as described.
Does this just impact Liontrust?
This change is industry wide, and the impact on a fund will depend on what each fund’s portfolio holds. In Liontrust’s case, many of the OCFs will not change.
Why is the disclosure of these figures changing now?
Liontrust remains committed to communicating clearly with investors and aligned to industry guidance and best practice. Following the latest industry guidance, Liontrust has taken the decision to update and align the costs that are disclosed with the target timeline indicated.
Liontrust will engage with third parties who may use this information to ensure that this change is clearly communicated. Given this is industry guidance, it is anticipated that this change will be implemented by many asset managers across the industry at the same time.
1 The Ongoing Cost refers to the MiFID Ongoing Cost which is a cost figure that includes the costs of closed ended CIS.
2 A rebate is a way of discounting the AMC an investor pays on a class whereby the Investment Manager either reinvests the amount into the class or pays it back to the investor.
3 A collective investment scheme is a pooled open ended or closed ended investment vehicle. For inclusion in the OCF, Liontrust use the AIFMD classification of a Collective Investment Undertaking (“CIU”).
4 Funds that may incur performance fees as at 30.06.2022 include the SF Monthly Income Bond Fund, Tortoise Fund, GF US Equity Fund, GF European Smaller Companies Fund, GF European Strategic Equity Fund and GF Tortoise Fund.
The names of the costs may differ from fund to fund. Please refer to the relevant prospectus for further information.
