Investment fees explained: OCF, platform fee and transaction costs
Quick answer: Investment fees come in layers — the fund itself charges an Ongoing Charges Figure (OCF), the platform charges to hold and trade it, and there can be transaction costs on top.
Investment fees come in layers — the fund itself charges an Ongoing Charges Figure (OCF), the platform charges to hold and trade it, and there can be transaction costs on top. Over decades, small differences in fees can swallow large chunks of growth, so it pays to know what you are paying for.
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Primary source: https://www.fca.org.uk/consumers/investments
The OCF and what it includes
The Ongoing Charges Figure is a standardised measure of what it costs to run a fund each year — management fees, custody, administration and audit — expressed as a percentage of fund assets.
Typical OCFs: passive index funds and ETFs are often 0.05%–0.25%; broad active funds 0.50%–1.00%; specialist or actively-managed multi-asset funds can be 1% or more.
Performance fees (charged by some active funds when they beat a benchmark) are not always in the OCF and need separate scrutiny.
Platform fees
Platforms charge to hold your ISA, SIPP or general investment account. Models vary: percentage-based platforms (e.g. 0.15%–0.45% of assets) usually suit smaller portfolios; flat-fee platforms (e.g. £10–£20 per month) tend to suit larger ones.
Some platforms charge separately for share dealing (e.g. £5–£12 per trade), others bundle it. Always read the platform's charges page in full and consider how often you trade.
Transaction costs and the spread
When a fund buys and sells underlying holdings it incurs broker commissions, taxes and a bid-offer spread. These are disclosed separately in the fund's Key Investor Information Document (KIID/KID) as 'transaction costs', sometimes shown as a small additional percentage.
When you trade an ETF or share yourself you pay the bid-offer spread plus 0.5% stamp duty on most UK shares (ETFs are typically exempt).
Why this matters over decades
Fees compound. A £100,000 portfolio growing at 5% a year before fees for 30 years would be worth around £432,000 with no costs, £384,000 with 0.5% total annual fees, and £288,000 with 1.5% total annual fees — a difference of nearly £100,000 just from the higher charge.
This is not investment advice — but it does explain why low-cost passive funds and platforms have grown rapidly.
Common questions
- Are 'free' trading apps really free?
- They make money in other ways — payment for order flow, foreign exchange margins on overseas trades, interest on uninvested cash, or premium subscriptions. Read the full charges schedule before assuming there are no costs.
- How do I compare two platforms?
- Add the platform fee, fund OCFs, dealing costs and any account fees together, based on the value and trading frequency you actually expect. Most platforms publish worked examples.
- Is a fee tiered or capped?
- Some percentage-fee platforms cap the charge above a certain balance (e.g. capped at £25 a month for funds), which makes them more competitive for larger portfolios. Check whether caps apply to all asset types or just shares/ETFs.