We Don't Charge Much
Fees are an unavoidable part of managing money, but an important part because you, the investor, get your return after fees. So when comparing fees you need to look at the offer to bid spread. Pardon? That is the difference between what you put in and what you get out, not the gross return of the fund before you have paid the fees. Fees come in two forms, the initial charge and the annual management fee. The initial charge is pretty much what it says it is. A fee you pay the manager for the honour of looking after your money and it is usually 5%. On top of that you pay an annual management fee to the manager to keep everything just so. That fee is usually 1.50% but it can be as high as 2.0 % or as low as 1%. The exceptions to this are index or tracker funds. They won’t normally impose an initial charge and their annual management charge could be as low as 0.50%. But then they aren’t adding any value so they shouldn’t be charging much.
Our fees come in between. We are adding value, but we are doing it in systemised, process driven way by using existing data and not by trying to second guess everyone else. If you have found us through this web site we don’t think it is fair to charge you a fee for doing that. So we don’t. There is no initial charge for investing in our fund if you use the Internet and apply directly. If you use a third party, like an IFA or a private client fund manager, he or she may do so. That is called initial commission and can be an additional 5%.
Our annual fee after commission is less than much of the industry at 0.75% so that means you get to keep more of the investment gain. We can do that because we are a small team working efficiently with readily available data. Because The Munro Fund is based around dividends it should normally have a better yield than the market, and therefore better than simple capitalization weighted tracker funds. That additional return may well be enough to compensate for the small difference in fees between this fund and the most competitive conventional trackers. Remember too that if you invest through a third party, like an IFA or a private client manager, he or she might levy an additional charge to cover its costs.
Some managers, mostly of hedge funds, charge a performance fee. That means they charge even more if the fund does better than a specified benchmark. If that benchmark is a different asset class, like cash or bonds as some hedge funds specify, then even some trackers could pass that hurdle if equities have a particularly good run. Of course they don’t give you money back if they fail. That seems a rather unfair arrangement to us. We just charge a flat fee based on the funds under management.