LESSON 11.1 · CORE

OCF, TER, AMC — three acronyms, one idea

Three names for what a fund takes before you see a return.

COSTS, TAX AND WRAPPERS (UK)3 MIN READ

The annual management charge, or AMC, is the fund manager's fee. The ongoing charges figure, or OCF, adds the fund's other running costs — administration, custody, audit — and is the charge UK factsheets lead with. The total expense ratio, or TER, is an older measure of much the same thing, and many ETF providers still quote it. All three are a yearly percentage of what you hold.

You never see a bill. The charge is taken from the fund's assets a little at a time, so the fund's price is already net of it and its returns are reported after it. Transaction costs — the fund's own commissions, spreads and taxes when it buys and sells — aren't in the OCF, and are reported separately in the fund's costs and charges information. The app shows a fund's price after all of these and doesn't list them; the factsheet does.

AMC · the manager's feeOther running costsOCF, much the same as a TER

Transaction costs come on top, reported separately. All of it is taken before the price you see.

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