What Is the OCF (Ongoing Charges Figure) and Why It Matters

The ongoing charges figure, or OCF, is the single most useful number on a fund factsheet, and the one most investors glance past. It is the annual cost of owning a fund, expressed as a percentage, and it is charged every year for as long as you hold the fund whether it goes up or down. A fraction of a percent sounds trivial. Over an investing lifetime, compounded, it is the difference between two very different outcomes. This guide explains exactly what the OCF is, what it does and does not include, and why the evidence says minimising it is one of the few reliably good decisions in investing.

What the OCF actually is

The OCF is the standardised measure of a fund’s running costs. It bundles together the annual management charge the fund manager takes plus the operating costs of running the fund: administration, the depositary or trustee, custody, audit, legal and regulatory fees. It is quoted as a single percentage of the fund’s value, so an OCF of 0.22% means roughly that share of your holding goes on costs each year.

Crucially, you never see this charge leave your account. It is deducted from the fund itself, so the daily price you see already has the cost taken out. That invisibility is exactly why the OCF gets ignored: there is no line on a statement saying “fees”, just a slightly lower return than the fund’s investments actually produced. The OCF replaced the older total expense ratio (TER) as the standard disclosure, so on modern factsheets it is the figure to look for.

What the OCF leaves out

The OCF is comprehensive but not complete, and knowing the gaps stops you underestimating the true cost of ownership.

• Portfolio transaction costs. When a fund buys and sells the shares or bonds it holds, it pays broker commissions and transaction taxes such as stamp duty. Those trading costs are taken from the fund’s capital but sit outside the OCF. They are usually disclosed separately as transaction costs, and they tend to be higher for actively managed funds that trade a lot than for a passive index fund that rarely does.
• Platform and account fees. The OCF is the fund’s own cost. The platform or broker you hold it on charges its own fee on top, which is a separate decision covered in our guide to the cheapest stocks and shares ISA platforms.
• Entry and exit charges. Most modern funds have none, but where they exist they are separate from the OCF.

So the honest total cost of an investment is the OCF plus transaction costs plus your platform fee. Compare funds on all three, not the headline OCF alone.

Why a small percentage matters so much

This is where the maths earns your attention. Fees do not just cost you the fee. They cost you the fee, plus all the growth that money would have earned for the rest of your investing life. That is compounding working against you.

Consider two funds tracking the same market, one with an OCF of 0.15% and one at 0.90%. The gap is 0.75% a year, which feels negligible. But applied every year to a growing balance over three or four decades, the cheaper fund can leave you with tens of thousands of pounds more on a substantial pot, purely because less was skimmed off and more stayed invested to compound. The regulator makes exactly this point: even a small difference in charges has a large effect on your final wealth over the long term. The Financial Conduct Authority requires clear cost disclosure precisely because these figures are easy to overlook and expensive to ignore.

What a “good” OCF looks like

There is no single right number, but there are useful reference points. Broad, mainstream index trackers and ETFs commonly sit somewhere in the region of a fraction of a percent, and the cheapest global trackers are lower still. Actively managed funds typically charge several times more, often approaching or exceeding 1%, on the promise of beating the market. The uncomfortable evidence from decades of data is that most active funds do not beat their benchmark after costs, and the OCF is a large part of why: the higher fee is a certain drag, while the outperformance meant to justify it is not certain at all.

That is the rational takeaway. You cannot control what markets return, but you can control what you pay to access them. Choosing a low-OCF fund is one of the few investing decisions where the benefit is close to guaranteed. Read the factsheet, find the OCF, add the transaction costs and platform fee, and treat the total as the price of admission worth minimising.

Frequently asked questions

What does the ongoing charges figure (OCF) include? The OCF includes the fund’s annual management charge plus its operating costs: administration, depositary or trustee fees, custody, audit, legal and regulatory expenses. It is shown as a single yearly percentage of your holding and is deducted from the fund itself, so the quoted price already reflects it. It does not include portfolio trading costs or your platform’s own fee.

What is not covered by the OCF? The OCF excludes portfolio transaction costs such as broker commissions and stamp duty when the fund trades its holdings, any platform or account fee charged by your broker, and any entry or exit charges. To judge the true cost of owning a fund, add the OCF, the separately disclosed transaction costs and your platform fee together rather than relying on the OCF alone.

Is a lower OCF always better? For funds tracking the same market, a lower OCF is a reliable advantage because you keep more of the return. Across different strategies you should weigh what you are getting, but the evidence shows most higher-cost active funds do not beat their benchmark after charges. Since you cannot control returns but can control costs, minimising the OCF is one of the soundest decisions available.

How much does the OCF affect my returns over time? More than it looks, because of compounding. A difference of even 0.5% to 0.75% a year, applied to a growing balance over several decades, can cost tens of thousands of pounds on a large pot. The fee itself is small, but it also removes the future growth that money would have earned, which is why long-term investors watch charges so closely.

Where do I find a fund’s OCF? The OCF is shown on the fund’s factsheet and its Key Investor Information Document (KIID) or the equivalent cost disclosure, usually as a single annual percentage. On many platforms it is listed next to the fund name. Look for the separately stated transaction costs nearby, and remember to add your platform’s fee to get the full picture of what you pay.