What is an Initial Charge?

Often a fund manager will apply an initial charge when you buy a Unit Trust, OEIC (Open Ended Investment Company) or ISA investment. If there is an initial charge, it will normally be deducted from the amount you intend investing in a fund. The charge is made by the fund manager to cover costs it incurs when setting up your investment in a fund and include dealing and administration costs. Initial charges typically range from 3% to 5.25%. They can vary between fund managers and also between the funds that a fund manager may offer. However, SFS Invest Direct will rebate all initial commission to reduce the initial charge if you buy online.

What is an Annual Management Charge?

An Annual Management Charge (AMC) is a fee applied to your investment on a yearly basis by a fund manager. The charge is in place to cover expenses incurred by the fund manager in the running of the fund, for example fees, administration costs and investment management costs.

Annual management charges are normally a percentage of the value of your fund and can be typically between 1% and 1.5%.

What are the charges for switching funds?

Once you’ve registered and become a SFS Invest Direct customer you can switch the funds that you hold as often as you like. A reduced initial charge of 0.25% is available on many funds. To switch the funds that you are currently invested in, please login to access our Account Management tool.

What is Initial Commission?

Intermediaries commonly receive initial commission from a fund manager when a client invests in one of the fund manager’s funds. Initial commission is accounted for by the fund managers in their initial charges and is calculated as a percentage of your initial investment into a fund. Typically this percentage on ISAs, Unit Trusts and OEICs can be as high as 5%.

When you buy online with SFS Invest Direct we pass on 100% of the initial commission to you the client to reduce the initial charges made by the fund managers. However, if you require advice from one of Skipton Financial Services’ whole of market advisers it is not possible to pass back the initial commission to you because it is required to cover the cost of providing advice. To be contacted, click here.

What is Trail Commission?

Fund managers pay intermediaries, including SFS Invest Direct, trail commission as long as we continue providing a service in relation to your investment in their fund. Trail commission is calculated as a percentage of the value of your fund investment, typically this percentage is 0.5% per annum paid by the provider.