Fund charges and costs
Also in this section
Aviva Investors actively promotes the understanding of the nature of charges and costs, and transparency in their disclosure to investors.
All funds are subject to charges and expenses. They are the costs of running the fund, including marketing and distributing it.
The table of fund charges and costs in the link below and the following wording explain what these charges may be and state the charges applicable to our funds or where details can be found.
What are ongoing charges?
This is a historic measure of the annual costs of managing a fund, although it may be based on an estimate of upcoming costs where this provides a better indication of the expected costs. The ongoing charge is made up of a fund management fee* and, where a fund invests a substantial portion of its assets in other funds an amount for the pro-rated charges of those other funds. The daily fund price reflects the deduction of the ongoing charges.
*The fund management fee is a single fixed rate charge to cover underlying costs of managing the fund.
Property Expense Ratio
The nature of investment in real property is such that there are significant costs associated with property assets. A fund will bear expenses in relation to real property asset management (such as lease renewal costs, rent review fees and letting costs) known as the Property Expense Ratio (PER). The PER will vary over time and is in addition to the ongoing charge. The PERs for all share classes are available in the Report and Accounts on avivainvestors.com.
Portfolio transaction costs
These are the expenses incurred by the fund when buying and selling assets on behalf of its investors. Portfolio transaction costs can be split into explicit (direct) and (implicit) indirect transaction costs.
Also referred to as direct transaction costs these are the costs incurred when the fund buys and sells investments. These costs are separate from the ongoing charge and include broker commission (fee paid to a broker to execute a trade) and taxes. The transaction costs are the result of decisions made by the fund manager to buy and sell shares to improve returns.
Also referred to as indirect transaction costs these costs are different to direct costs as there is no specific cash payment, but these costs do have an impact on the performance of a fund. Indirect costs are made up of Dealing/Issue to cancellation spreads and Dilution.
The dealing spread is relevant to the single priced funds and represents the difference between the buying and selling price of the underlying investments. The Issue to cancellation spread is relevant to the dual priced funds. The Issue to cancellation spread is the difference between the issue price and the cancellation price.
We operate a dual pricing methodology for certain funds. This means that when such a fund is experiencing net inflows, buying and selling shares/units takes place on an offer pricing basis, calculated by reference to the price of buying the underlying investments (the creation or issue price). However, when that fund is experiencing net redemptions, buying and selling shares/units takes place on a bid pricing basis, calculated by reference to the price of selling the underlying investments (the cancellation price). This means that, when investments are bought or sold as a result of other investors joining or leaving the fund, your investment is fully protected from the costs of these transactions as dilution is addressed within the price.
For funds where we operate a single pricing methodology we reserve the right to charge a dilution levy (Investor Protection Fee) to protect your investment from the costs of buying or selling investments that result from large investors joining or leaving the fund. For details of dilution levies applied in a fund historically, and on what values, please see that fund's Prospectus.
None of our funds currently have a performance or exit fee. We also do not impose an entry charge on any of our funds other than the Aviva Investors US Equity Income Fund.
The table below shows how fund charges can impact investment returns
|Amount Invested (£)||£10,000||£10,000|
|Entry Charge||0.00%||5.00% (£500)|
|Ongoing charge||0.2% (£20)||0.9% (£90)|
|Direct transaction costs||0.05% (£5)||0.18% (£18)|
Please note that the above illustration is over a 12-month period and assumes the amount invested stayed the same over the period, fund performance has not been included, this could have either a positive or negative impact on returns. The entry charge for fund B is a one-off cost.
For more information on our transaction costs please see our costs and charges Q&A
Download the latest KIID, Report & Accounts and other literature here for each of our funds.
Further guidance on fund charges and costs can be found on the Investment Association’s website by clicking here .