Fund managers have slowly been increasing the management fees they charge to look after your investments. In addition to the Annual Management Charge (AMC) which may be as high as 1.75% per annum, they are also ‘top-slicing’ your investment fund.

This means that if the fund performs better than the specified benchmark, the manager will take a percentage of the over-performance. For example, the New Star Heart of Africa Fund takes 20% of everything the fund achieves over their target of 3% above LIBOR. This significantly reduces the value of your investment.

However, the fees do tend to be less than this for lower risk funds. Also you can use a fund supermarket, such as Cofunds, which offer discounts to the managers charges.

Tags: cofunds, new star

This entry was posted on Monday, June 16th, 2008 at 12:42 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.