What is an ongoing charges figure (OCF)?
The ongoing charges figure, or OCF, is a fund’s yearly running cost expressed as a percentage of the money invested in it, taken inside the fund price rather than billed to you.
It is one of three layers in advised investing; the FCA’s 2020 evaluation found platform and fund charges together averaged 1.1% a year for advised clients.
What it includes, and what it leaves out
The OCF covers the fund manager's fee and the fund's running costs, such as administration, custody and audit. It does not include the costs of buying and selling holdings inside the fund (transaction costs), which are disclosed separately, nor any platform fee or adviser charge.
Because the OCF is deducted inside the fund, you never see it as a separate line on most statements. It shows up as a slightly lower return.
How much OCFs vary
Index-tracking funds that follow a market typically have low OCFs, often 0.25% a year or less. Actively managed funds usually cost more, and specialist funds more again. A higher OCF is not by itself a problem. It is a cost the fund has to earn back before you benefit.
Where to find it
Every fund publishes its OCF in its key information document or factsheet. Your annual costs and charges statement should show what fund costs you actually paid, in pounds.
Related definitions
Sources
- FCA, Evaluation of the impact of the RDR and FAMR (December 2020)
- FCA Handbook, COBS 6.1ZA — Information about the firm and costs and charges
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