We regularly review our fund charges to keep the cost of investing as low as possible for our customers. But what are fund charges and why do you pay them?
Fund charges are like little keys
Investment funds are an incredibly useful way to keep the costs of investing low, as they unlock access to lots of investments all at once.
Each investment fund can hold potentially thousands of individual stocks, bonds and other things from markets across the globe. This makes them a quick, easy and affordable route to a balanced investment plan, compared to researching and buying each investment yourself.
You pay a fund charge to each fund provider (e.g. Vanguard or Blackrock) in return for them doing all of the leg-work and managing the investments in the fund, day to day.
Not all funds are created equal
We select low-cost funds from reputable fund providers, including Blackrock, Vanguard, Legal & General and Fidelity International. We use mostly passive funds, as they are the lowest-cost funds available, but we never pick funds just because they are the cheapest. We always balance cost with quality.
Funds have varying levels of risk associated to them, depending on the type of investments they contain. Investing in shares carries more risk than investing in bonds, for example. If you’ve chosen a Cautious Plan then the funds we select for you will contain fewer stocks & shares and more bonds, as well as some cash alternatives, to help manage your risk appropriately. On the other hand, if you’ve chosen an Adventurous Plan then your investments will contain more shares and less cash and bonds.
In addition to monitoring the performance of the funds, we also keep a close watch on the fund charges to ensure we’re keeping the cost of investing as low as possible for customers. This is incredibly important, as the higher the costs of investing, the less of your returns you get to keep.
How fund charges are applied to your Plan
Each fund we use incurs a small charge, taken by the fund provider at source. We use a mix of funds in your plan, which are reviewed periodically, so we always quote our average fund charge when you sign up. All fees and fund charges are taken into account when we predict the future value of your investments.
Find out how much your savings could be worth on our create a plan page
Please remember that investments can go up and down in value, and you can get back less than invested.