Charges explained | How to invest | Liontrust Asset Management PLC

Charges explained

There are a few charges that may be applied to the funds in which you invest. Here we explain these costs in relation to our funds and why you may be subject to them when you invest.


We have produced a European PRIIPS Template (EPT) and a European MIFID Template (EMT) to bring us into line with the standardised methodology for asset managers providing information to insurance companies, platforms and intermediary clients. If you would like to see one or both of these templates, please email us at
 datacollection@liontrust.co.uk.

One-off charges

Initial charge

The initial charge is the maximum amount that might be taken out of your investment before it is invested in one of our funds (in some cases, it might be less than this figure) and covers the cost of setting up your investment. For example, if you invest £1,000, an entry charge of 2% means that £980 of your money will be used to buy units in a fund. The initial charge varies from class to class, with some not having an initial charge.

 

Our unit trust range comprises dual priced funds. For these, the initial charge is included in the offer price at which you buy into the funds. Our range of ICVCs (Investment Company with Variable Capital) comprises single priced funds and, for these, the initial charge is added to the Net Asset Value price. The initial charge for our Funds is shown on our  factsheets and Key Investor Information Documents (KIIDs).

Exit charge

There are no exit charges on Liontrust funds.

Charges taken from funds over the course of a year

Funds are subject to costs and charges on an ongoing basis. The two most talked about are the annual management charge (AMC) and the Ongoing Charges Figure (OCF). 

The AMC covers the annual charge for managing the fund’s assets (i.e. for the selection and management of the investments held by funds) and is levied as a percentage of the size of the fund.

Other, non-investment costs and charges of operating a fund are known as Operating Expenses. The Operating Expenses include but are not limited to:

  • Keeping a record of your investment;
  • Paying income to you;
  • Sending annual and interim reports;
  • Valuing fund assets and calculating prices;
  • Maintaining fund accounting records;
  • Depositary and trustee oversight; and
  • Auditors’ fees.


The Operating Expenses are paid directly by Liontrust and are reimbursed by each fund at a flat rate per year (Administration Fee) out of their respective net asset values.

The OCF for each of Liontrust’s funds in both our unit trust and ICVC ranges is made up of the AMC plus the fixed Administration Fee. In some periods, the Operating Expenses paid by Liontrust may be more than the Administration Fees collected by Liontrust from a fund. If this is the case, Liontrust will pay the difference from its own resources. Conversely, in some periods, the Administration Fees may be higher than the Operating Expenses, in which case Liontrust will retain the difference.

We have grouped funds into the following types:

Type of fund

Administration Fees (per annum)

Bond funds – Investment Grade

0.15%

Bond funds – High Yield

0.15%

Bond funds – Absolute Return

0.10%

Global Equities & Global Mixed Assets

0.18%

Asia Equities

0.22%

European Equities

0.18%

UK Equities (excluding Small Cap)

0.16%

UK Equities (Small Cap)

0.16%

UK Equities (Index Tracker Funds)

0.125%

As the funds grow in assets, the fixed Administration Fees are reduced. A discount is applied to the Administration Fees up to a maximum of 0.06% on a fund with more than £5 billion in assets. The tiered deductions are shown below. If a fund subsequently decreases in size, the relevant tiered deductions will be removed.

 

Net asset value

Discount to be applied to the Administration Fee (per annum)

Below £500 million

0.000%

£500 million to £1 billion

0.010%

£1 billion to £2 billion

0.020%

£2 billion to £3 billion

0.03%

£3 billion to £4 billion

0.040%

£4 billion to £5 billion

0.05%

Over £5 billion

0.060%

Some other expenses are not included in the OCF. These other expenses include:

For unit trust funds:

  • brokers’ commission, fiscal charges and other disbursements which are:

- necessary to be incurred in effecting transactions for the Funds, and

- normally shown in contract notes, confirmation notes and difference accounts as appropriate;

  • interest on borrowing permitted under the Funds and charges incurred in effecting or terminating such borrowings or in negotiating or varying the terms of such borrowings;
  • taxation and duties payable in respect of the property of the Funds, the Trust Deeds or the issue of units;
  • liabilities on unitisation, amalgamation or reconstruction arising in certain circumstances specified by the COLL Sourcebook; and
  • VAT or any similar tax is payable in respect of the above.


For ICVC funds:

  • taxation and duties payable by the Company, including without limitation in respect of the scheme property or the issue or redemption of Shares;
  • interest on and charges incurred in effecting, negotiating or varying the terms of, or terminating borrowings;
  • any amount payable by the Company under any indemnity provisions contained in the Instrument of Incorporation or any agreement with any functionary of the Company;
  • fees and expenses incurred in acquiring, disposing of and registering investments (including brokers' commissions, any issue or transfer taxes or stamp duty or SDRT chargeable);

  • royalty fees incurred for the use of stock exchange index names;

  • any liabilities on amalgamation or reconstruction of the Company or any Fund or which arise after transfer of property to the Company in consideration for the issue of shares in accordance with the COLL Sourcebook;

  • the fees and expenses incurred in any offer of Shares and the creation, conversion and cancellation of Shares establishing any new Class and/or Fund;

  • any payments otherwise due by virtue of the COLL Sourcebook;

  • VAT or any similar tax is payable in respect of the above. 

Other charges

Portfolio transaction costs

Funds incur portfolio transaction costs when they buy and sell shares to achieve their investment objective. A significant proportion of these costs is recovered directly from investors joining and leaving the Fund through the bid/offer spread (see the section on Dual priced funds below for more details on the bid/offer spread) or via the application of a dilution adjustment (see the section on single priced funds below for more details).

 

In the case of shares, broker commissions and stamp duty are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Unlike shares, other types of investments, such as bonds, money market instruments and derivatives, 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.


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 fund manager’s 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.
  • Transaction costs vary from country to country.
  • Transaction costs vary depending on the types of investment in which a fund invests.
  • Transaction costs vary but are linked to portfolio activity.

Performance fees

Some funds may charge a performance fee. In these instances, when a fund outperforms a particular target level or benchmark, the manager is entitled to receive a proportion of the excess performance. If the fund underperforms, no additional fee is levied. There may be other factors in the calculation including high watermarks or clawbacks. Full details on the mechanism of a fund’s performance fees are included in the prospectus.

Dual priced funds

Our range of UK-based unit trust funds are dual priced. This means our funds have an offer (or buying) price and a bid (or selling) price and the difference between these is known as the bid-offer spread.


When pricing one of our unit trust funds, the pricing agent begins by calculating the creation price, which is the basic cost of creating a new unit and includes the price of buying underlying holdings and dealing costs such as stockbroking commission and stamp duty. To calculate the offer price, the pricing agent adds any applicable initial charge to the creation price. It follows, therefore, that any party purchasing units is compensating existing investors for any dilution in the fund’s value caused by underlying fund transaction costs that may result from their unit purchase.


The bid price at which units may be redeemed by investors is made up of the price that would be received when redeeming the underlying holdings less dealing costs such as stockbroking commission and stamp duty. It follows again, therefore, that any party selling units is compensating existing investors for any dilution in the fund’s value caused by underlying transaction costs that may result from their unit redemption.


The spread between a dual priced unit trust fund’s bid and creation price will be dependent on the profile of the underlying portfolio of holdings. Funds transacting predominantly in less liquid, small cap stocks, where the underlying shares are traded on a wider spread and have higher associated dealing costs, will exhibit a wider bid to creation spread than funds predominantly transacting in more liquid, large cap stocks.


Single priced funds

Our range of UK-domiciled single priced funds are ICVCs (Investment Company with Variable Capital) and our Ireland-domiciled single priced funds are OEICs (open-ended investment company).    


Shares in ICVCs and OEICs are bought or sold at the same single price, which is directly linked to the value of the fund’s underlying investments and therefore there is no bid-offer spread. An ICVC and OEIC fund, however, can apply a swinging price dilution adjustment to protect existing shareholders from the costs of buying and selling underlying investments that are incurred as other investors join or leave the fund. The dilution adjustment will effectively swing the price from the single mid-price to either a bid or offer single price for investors joining or leaving the fund. This is usually applied when there are large inflows or outflows given that the associated costs can dilute the value of the fund for existing investors. The Liontrust ICVC and OEIC funds automatically implement a dilution adjustment when 3% of a fund is being subscribed or redeemed.

Back to top