How have investment trust charges changed?

In September 2024, the rules around how investment trusts have to declare their charges changed. The regulator, the Financial Conduct Authority (FCA), declared that temporarily, investment trusts don’t have to adhere to European PRIIPs Regulation, which has certain rules around how costs and charges figures must be declared. The government and FCA stated that the current cost disclosure rules under PRIIPs Regulation was problematic for investment trusts, often misrepresenting the cost structures of trusts.

This means that, temporarily, investment trusts don’t have to publish a Key Information Document (KID) if they choose not to and they don’t have to lay out their costs and charges in the same way that a fund does. Different trusts will implement these rules in different ways, meaning that some trusts you invest in may choose to publish the documents, while others don’t.

The temporary move has been made by the regulator while it works on introducing new rules that will replace the PRIIPs Regulation. This new framework for the investment industry will lay out the rules for various elements of the fund industry, including a new way for investment trusts to list their charges.

It means that in the interim, investors may find the investment trust they want to invest in doesn’t have a Key Information Document or has listed its charges as 0% on the KID or fund factsheet. In reality, the trust will have incurred running costs, from managing the investments, transaction costs or one-off charges. But under this temporary regime, it can list the Ongoing Charges Figure (OCF) as 0%.

If investors want to know the costs incurred by the trust so they can compare them with its peer group, they should be able to find them in the annual report and accounts, or other cost disclosure documents published by the trust. These costs are not charged directly to investors, and instead come off the value of the investments in the trust, and are reflected in the net asset value (NAV) of the underlying investments.

For further details on the regulator’s decision, you can refer to the Financial Conduct Authority’s official statement. And for more information, take look at our investment trusts page.