We do not levy a preliminary charge unless a fund is closed to new investors.
Annual Management Charge (AMC)
The AMC, after the deduction of the investment administrator's fees and any commission due to intermediaries or financial advisers, is paid to the fund management house. The AMC rates on the Trojan Investment Funds are listed on the Charges page.
The rates vary according to which share class you hold.
- The 'S' share class has the lowest AMC and is only available to UK registered charities.
- The 'O' share class is the Ordinary share class.
- The 'I' share class is the Intermediary carries an AMC which is 0.5% higher than the 'O' share class. This additional 0.5% is available to be paid as 'trail' commission to intermediaries where the investor wishes to remunerate their adviser through the AMC.
The AMC is deducted from the income of the Trojan Fund, the Trojan Capital Fund and the Spectrum Fund. For the Trojan Income Fund the AMC is deducted from the capital which increases the amount of income available for distribution but may constrain capital growth.
In addition to the AMC, funds absorb other costs including administration, regulatory and audit fees. These are of a fixed nature and therefore the larger the fund, the smaller they are as a percentage. The Ongoing Charges take account of these additional charges.
The dilution levy of 0.5% is charged on all fund purchases and sales. It is paid directly into the fund and does not benefit Troy Asset Management in any way. It is in place solely to protect the interests of existing and continuing investors who would otherwise bear all the dealing costs incurred when investors enter or leave the fund. A dilution levy is a common feature of open-ended investment companies (OEICs) with a single price structure, such as the Trojan Funds. Under single pricing, investors enter and leave the fund at a price based on the mid-price of the underlying assets. This means that the costs of buying and selling the underlying assets are borne by the existing and continuing investors, unless a dilution levy is in place. For illustration:
An investor investing £100 directly into equities would receive broadly £99 of equities after deduction of stamp duty, broker commission and the spread on the equity prices (he is buying at the offer rather than the mid-price). If he invested in an OEIC containing the same underlying equities, and with no dilution levy in place, he would receive broadly £100 of equities. The £1 benefit to the new investor in the OEIC is to the detriment of existing investors who are bearing his dealing costs. The same is true for investors leaving the fund - though here the benefit to the leaver is nearer 50p than £1, there being no stamp duty on sales.
Under dual pricing (the traditional structure for unit trusts) the issue is dealt with through the bid-offer spread on the fund units. For OEICs the solution is a dilution levy. The Trojan Investment Funds’ levy is struck at a level designed to obtain a reasonable balance between investors’ interests - recognising that the funds are likely to have different weightings in equities, bonds and cash - while maintaining simplicity and transparency through an equal charge for investors entering and exiting the funds.
Certain funds charge performance fees to their investors if performance is above a certain threshold. At Troy we do not charge performance fees. This is consistent with Troy’s desire to keep the cost of investing low and also reflects a concern that performance fees can distort the way funds are run, encouraging managers to take excessive risks.
Finally it is worth bearing in mind that frequent dealing within funds will push up costs. This will not be reflected in the Ongoing Charges. At Troy we aim to invest for the long term and to keep portfolio turnover to a minimum.
Note: ALL fund performance figures are stated after ALL costs (with the exception of the dilution levy)