Discretionary Fund Management Charges
Discretionary Fund Management Charges
So, what is the cost? Discretionary Fund Management costs vary between managers, but generally they make no charge to invest (or to disinvest) with them and charge an Annual Management fee in the range of 0.75% - 2%. However, because they tend to deal in ‘institutional units’ of investment funds, they may have 0.75% p.a lower fund charge, thus reducing the annual cost. They buy and sell funds with very low or no initial charge, whereas a private investor may incur up to 5% initial charge or ‘bid offer spread’ on every switch between fund management groups.
Comparing a Discretionary Management service to a self managed portfolio needs to account for the true costs of self management before dismissing the discretionary option on cost grounds alone. Their expertise more than compensates for the slightly higher fund cost.
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