What the investment trust ongoing charge includes

The ongoing charge on an investment trust is the estimated annual cost of holding it. It is built around the annual fee paid to the fund manager, plus regular recurring costs such as directors' fees and audit fees¹. It is expressed as a percentage of the trust's net assets, and it is taken out of the trust's own money rather than billed to you.

Three things sit outside it, and they are the ones people most often assume are inside. Performance fees are not included¹. Transaction costs, the dealing costs the manager pays when buying and selling within the portfolio, are not included¹. Gearing costs, the cost of borrowing to invest, are not included either¹. Where a trust pays a performance fee, the Association of Investment Companies publishes a separate figure called ongoing charge plus performance fee, which includes the performance fees paid in the last financial year¹.

The figure is backward-looking. The Association of Investment Companies calculates costs for the last financial year and divides them by the net assets of the company to produce a percentage². The Key Information Document takes the opposite approach, attempting to be forward-looking to give an idea of what may be paid in future³.

What the ongoing charge covers: the manager's fee plus running costs

The largest single item is the annual management charge, the cost paid to the manager for managing the fund⁶. Around it sit the recurring costs of keeping the company running. The Association of Investment Companies describes the ongoing charge as including the annual fee paid to the fund manager plus regular recurring costs such as directors' fees and audit fees⁴.

That structure is common across pooled investments, not unique to trusts. Fund managers describe the ongoing charges figure as including the annual management charge and other operating costs⁷, and as covering the management and administration costs of running the fund⁸. One provider breaks its own figure into the annual management charge, a fixed administration fee and, where applicable, the costs of open ended underlying vehicles⁶. Another notes that operating costs can go up or down, which is why the figure is an estimate rather than a fixed price⁹.

For a consumer, the practical point is that the ongoing charge is the running cost of the vehicle itself. It is not the whole cost of holding the investment. Independent guidance notes that as most investment trusts are actively managed, they tend to have higher charges than tracker and index funds¹⁰. That is a statement about the market, not a verdict on any particular trust.

How the AIC works out the figure from last year's costs and net assets

The calculation is deliberately simple. The Association of Investment Companies calculates costs for the last financial year, and divides these by the net assets of the company to produce a percentage figure². Both halves of that sum are historical: the costs actually incurred, and the asset base over the period.

That is why the published figure lags. A trust reporting its ongoing charge in one year is describing the year before. The Key Information Document, by contrast, attempts to be forward-looking, to give an idea of what may be paid in future³. The two documents can therefore show different numbers for the same trust, and neither is wrong: they answer different questions.

The same backward-looking logic appears in fund documents generally. One Key Investor Information Document states that its ongoing charges figure is based on expenses for the twelve months ending December 2025¹¹. Another gives an ongoing charge of 2.06% as an estimate of charges taken from the fund over a year, excluding portfolio transaction costs and performance fees¹².

What the ongoing charge leaves out: performance fees, dealing costs and gearing

Three exclusions matter most, because each can be a real cost that a reader might assume is covered.

Performance fees. The ongoing charge does not include performance fees¹. Where they are paid, they appear in the Key Information Document, which includes transaction costs, gearing costs and performance fees where paid³. The Association of Investment Companies also publishes ongoing charge plus performance fee, which includes the performance fees paid in the last financial year¹.

Transaction costs. These are the costs of buying and selling assets within the portfolio. They are not in the ongoing charge¹. The PRIIPS ongoing charges figure does include transaction costs, buying and selling of assets within the trust's portfolio, and other charges which are not included in the factsheet ongoing charges figure¹³. The FCA's rules likewise treat transaction costs as sitting outside ongoing charges in the workplace pension charge cap, which applies to all ongoing charges and therefore excludes transaction costs¹⁴.

Gearing costs. Investment trusts can borrow to invest, and the cost of that borrowing is not in the ongoing charge¹. The FCA's rules list debt servicing or gearing costs among the things that are not ongoing costs¹⁵. The Key Information Document includes gearing costs, which are not in the ongoing charge³.

Are share dealing and platform fees part of the ongoing charge?

No. Costs paid by the investor which are external to the investment trust, such as stamp duty or fees for buying and selling investment trust shares, are not included². Those are your costs as a buyer and seller, not the trust's running costs.

Platform charges are separate again. The FCA lists platform charges among the other ongoing charges that sit outside the product's own ongoing charge figure, alongside discretionary fund management charges and charges relating to investments within the product¹⁶. A stocks and shares ISA can carry platform charges, management charges, trading fees and transfer out fees¹⁷, and one provider's own ISA documentation sets out an ongoing platform fee charge¹⁸.

The practical effect is that the total cost of holding an investment trust through a platform is the trust's ongoing charge plus whatever the platform charges you, plus dealing costs when you buy and sell. The ongoing charge is the trust's share of that, not the whole bill.

Is the ongoing charge taken from my investment or charged to me directly?

It is taken from the trust's assets. The costs are deducted directly from the fund's assets, rather than being paid separately by investors⁵, and the figure is expressed as an annual percentage calculated and deducted from the fund daily¹⁹. You do not receive an invoice for it.

That is why the charge shows up as a drag on performance rather than a line item. The FCA defines ongoing costs as direct or indirect costs or charges that are regularly deducted from payments due to the retail investor, the amount invested or the value of the investment¹⁵. One provider describes its ongoing charges as taken annually for managing the fund, including the annual management charge as well as operational fund costs such as custody, trading and reporting costs²⁰.

Where a fund invests in other funds, the costs of those underlying funds are also ongoing costs¹⁵. So a trust holding other vehicles can carry a layer of cost beneath its own headline figure.

Why the figure comes from last year, and what that means for you

The ongoing charge is a published estimate built from audited history. Because it divides last year's costs by net assets², it will not capture a fee change made this year, a one-off cost, or a shift in the asset base until the next reporting cycle. The Key Information Document is the forward-looking companion, attempting to show what may be paid in future³.

For a reader comparing trusts, the sensible approach is to look at both, and to read the exclusions as carefully as the headline. A trust with a modest ongoing charge but a performance fee, active dealing and gearing carries costs that the headline figure does not show. The Association of Investment Companies notes that the costs of running the investment trust, such as fund manager fees and accounting costs, are reflected in the performance figures, while costs paid by the investor which are external to the trust, such as stamp duty or fees for buying and selling shares, are not³.

If a charge has been applied in a way you think is wrong, or a firm has not explained its costs clearly, the Financial Ombudsman Service can look at complaints about financial services²¹. MoneyHelper offers free, impartial guidance on investment costs and choices.