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From gobbledygook to Latin...

Closed-end funds and OEICs
GJHarney
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From gobbledygook to Latin...

#115010

Postby GJHarney » February 1st, 2018, 5:46 pm

Good article from the Telegraph on new EU rules for funds relating to costs - it would seem they are so badly conceived that some tracker funds are ending up with a minus figure for the new ongoing costs figures!

http://www.telegraph.co.uk/investing/funds/gobbledygook-latin-new-eu-rules-make-harder-investors-understand/?WT.mc_id=e_DM652584&WT.tsrc=email&etype=Edi_Inv_New&utm_source=email&utm_medium=Edi_Inv_New_2018_02_01&utm_campaign=DM652584

scotia
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Re: From gobbledygook to Latin...

#115035

Postby scotia » February 1st, 2018, 7:23 pm

It appears that the article is not complaining about the EU rules per se - indeed it concedes that the aim of requiring the publication of a realistic figure on costs is laudable - however the UK fund managers appear to be unable (or unwilling or incapable?) to adopt a standard methodology in computing these costs.
Maybe a little less Latin and a bit more Maths in their education would have been helpful. (mind you in Scottish state schools we old timers got an excellent education in both)

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Re: From gobbledygook to Latin...

#115045

Postby Alaric » February 1st, 2018, 7:48 pm

scotia wrote: however the UK fund managers appear to be unable (or unwilling or incapable?) to adopt a standard methodology in computing these costs.


I'm surprised it isn't just a question of changing the accounting. Instead of recording the book cost of a purchase as being the whole outgo, split it into cost of shares, cost of commission and cost of stamp duty. On disposal, record the gross proceeds and the sale commission. That's how an individual would measure it. You just sum up and report the commission and stamp duty cost as the costs of trading.

scotia
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Re: From gobbledygook to Latin...

#115074

Postby scotia » February 1st, 2018, 9:31 pm

Alaric - agreed! Which leads me to believe that it may be deliberate obfuscation. I suspect the Fund managers don't wholeheartedly support the idea of clarity on the actual costs.

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Re: From gobbledygook to Latin...

#115115

Postby Muddywaters » February 2nd, 2018, 7:27 am

It’s because the rules are poorly laid out and open to interpretation. Things will settle down over the next year or two and we’ll end up with a common way of calcing fees, it’ll be up to the trade bodies to come together to find common ground so it’s like for like across all sectors

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Re: From gobbledygook to Latin...

#115119

Postby Dod101 » February 2nd, 2018, 7:42 am

Fundamentally I agree with the summary in the article. It does not really matter what the costs are if the end result is better and it is that result that matters not the process to get there.

I would much rather a fund took my £100 increased it to £150 after costs of £10 than another fund took my £100 increased it to £130 but only charged me £5. Where is the benefit in knowing that for the investor? Or the other way round, that the one fund charged only £5 last year but the other £10. What does that tell us about performance? Nothing. Ironically just more charges to be paid ultimately by the investor.

Like the AIFM directive of some years back it is yet another bit of bureaucracy dreamt up by the EU which will add costs to no-one's benefit.

Dod


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