Portfolio transaction costs
On average, over the last two years, the fund has incurred broker commissions of 0.09%, as a necessary part of buying and selling the fund's underlying investments in order to achieve the investment objective.
In the case of shares, broker commissions are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Unlike shares, other types of investments (such as bonds, money market instruments, derivatives) have no separately identifiable transaction costs; these costs form part of the dealing spread. Dealing spreads vary considerably depending on the transaction value and market sentiment.
Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them for the following reasons:
- Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager's investment decisions in improving returns and the associated costs of investment.
- Historic transaction costs are not an effective indicator of the future impact performance.
- Transaction costs vary from country to country.
- Transaction costs vary depending on the types of investment in which the fund invests.
- As the manager's investment decisions are not predictable, transaction costs are also not predictable.