Ongoing charges explained?

Im thinking of investing in a couple of stocks that have “ongoing charges”,but im confused as to how this actually gets taken/deducted,lets say ive got a stock with an ongoing charge of 3 percent(for example) how does this work?how is this paid?

stocks with ongoing charges? Perhaps the stocks you’re looking at are CFDs?

Hi :wave:

Assuming you are looking at say Investment Trusts or ETFs.

Think of them like a ‘look through’ - the charge is already baked into the price of that security, and the OCF is quoted for transparency to show you any fees incurred by the product. You don’t need to do anything for them to be paid.

When any charges are due, and cash flow from the company, or some of the assets held are sold behind the scenes to cover the fees.

Although costs are important, especially for say a global equity tracker(you want the cheapest if it’s simply trying to mimic an index), more complex products such as investment trusts normally incur a higher fee / OCF because more work is involved behind the scenes. This normally means a higher management fee or performance which is part of the OCF. I generally don’t mind paying these - if someone generates you a good return, they should be rewarded for their work. That said, some are too high.


Your reply is greatly appreciated, i hold a few etfs and the charges are nothing, like 0.12 percent etc but then i suppose what made me make the post was i was looking at a stock, ediston property (epic) and seen the charges were like near 3.5 percent i was kinda taken back by it a bit and just wondered how would that affect the returns and dividends because i cant remember seeing too many that high as i mostly put my money in funds.