Category: How we build the wealth shortlist
How we compare charges
Fund charges can eat away at performance and your returns, so it’s important to weigh-up performance potential against the cost of investing in a particular fund.
If there are two funds offering the same performance potential, charges become a greater consideration – especially when looking at passive funds.
The Wealth Shortlist now measures a fund’s ongoing charges against similar funds in the same sector.
Wealth Shortlist charge comparison
We break down each fund sector on our platform into funds with active and passive management.
We then order these sets of funds by their Ongoing Charges Figure (OCF) and score them.
There are five scores available, the lowest-charging get £, the highest-charging get £££££.
As an example, we divide funds in the UK All Companies IA sector into active and passive groups. We then order the funds in each group by the net charge paid by HL clients. We then give a £ to the cheapest 20%, ££ to the next 20% and so on.
- A fund’s net OCF is compared – this is the charge after any discounts
- The Wealth Shortlist groups funds by investment sector. Charges are compared by IA sector
- Funds in the same sector with the same charge will get the same rating
- Funds with the same charge will be rated the same. In sectors where lots of funds have the same charge, each rating of £-£££££ won’t have the same number of funds
- If a group contains fewer than five funds, we won’t apply a rating
- Ratings are calculated for unbundled funds only. This is the version of a fund available for new investors
Remember when investing with HL, our platform fee of up to 0.45% per year also applies.