Costs are coming down across the UK fund industry, but there's still a wide variation depending on whether you go active or passive, choose a trust or buy an ESG fund. When choosing investments, one of the first things that might come to mind is how much it is going to cost.
While it should not be the main reason to invest, it can certainly feel like a deciding factor in some cases. It can be offputting, especially when starting an investment journey, to see a chunk of money being taken away before it has had a chance to show any form of performance. For example, if you put £1,000 away into a fund that carries an ongoing charges figure (OCF) of 0.5% then you have already lost £5 on costs alone. Simply put, the OCF is the charge an investor will pay over the course of the year for as long as that investment is held.