The Ongoing Charges Figure, almost always shortened to OCF, is the single most important cost figure for anyone holding a fund. It's a standardised, annual, percentage-based measure of what a fund costs to run, deducted automatically from the fund's assets rather than billed separately — which is exactly why it's so easy to overlook, and exactly why, compounded over decades, even a seemingly small OCF can quietly cost a long-term investor thousands of pounds.
What the OCF actually includes
The OCF is a standardised measure required for retail fund documentation across the UK and EU, designed to let investors compare funds on a like-for-like basis. It typically includes:
- The fund manager's annual management charge (sometimes called the AMC), which pays for the investment management of the fund.
- Administration costs — legal, audit, regulatory, and custody fees associated with running the fund.
- Other operating expenses incurred in the normal running of the fund.
What the OCF does not include
Notably, the OCF excludes portfolio transaction costs (the dealing charges and stamp duty incurred when the fund itself buys and sells underlying investments) and any performance fee that some actively managed funds charge on top of their base fee. These are covered in more detail in the companion article on transaction costs and stamp duty, but it's worth flagging here that the OCF, while the single most useful figure available, is not literally the entire cost of holding a fund.
Why the OCF is deducted "invisibly"
Unlike a platform fee, which usually appears as a separate line item on an account statement, the OCF is deducted directly from the fund's assets before the fund's daily price is calculated. This means an investor never sees a specific transaction labelled "OCF charge" — the cost is baked into the performance figures the fund reports. This is precisely why many investors underestimate how much they're paying: a fund that returned, hypothetically, 7% before charges and has a 1% OCF will show a reported return of roughly 6%, with no separate charge visible anywhere on a statement.
A worked hypothetical example: how a 1% fee compounds over decades
Suppose an investor contributes a lump sum of £50,000 and leaves it invested for 30 years, with the underlying investments growing at a hypothetical 6% a year before charges. Compare a fund with a 0.15% OCF against a fund with a 1.15% OCF — a 1 percentage point difference, which sounds small on paper.
| Fund | OCF | Net annual growth | Value after 30 years (hypothetical) |
|---|---|---|---|
| Fund A | 0.15% | 5.85% | ≈£277,000 |
| Fund B | 1.15% | 4.85% | ≈£208,000 |
In this hypothetical example, the 1 percentage point difference in OCF results in a difference of roughly £69,000 over 30 years — not because either fund necessarily performed better or worse in terms of underlying investment decisions, but purely because of the compounding drag of an extra 1% deducted every single year, including in years when markets fall. This example uses illustrative growth rates only and is not a prediction of any real fund's future performance.
Why the effect is larger in retirement savings specifically
Pension pots built through a SIPP or workplace pension are often held for very long periods — potentially 30, 40, or more years including both the accumulation phase and a subsequent drawdown phase — which gives fee drag more time to compound than in most other kinds of saving. The pension annual allowance (£60,000 for 2025/26, or 100% of earnings if lower, with three years of carry-forward available) can lead to substantial contributions over a working life, meaning the sums exposed to years of compounding fee drag can be significant. The companion article on fee drag over 30 years explores this calculation across a range of fee levels and starting pot sizes in more depth.
Typical OCF ranges by fund type
| Fund type | Typical OCF range (illustrative) |
|---|---|
| Passive index tracker fund (e.g. tracking the FTSE All-Share or S&P 500) | 0.05%–0.25% |
| Multi-asset "ready-made" fund | 0.15%–0.35% |
| Actively managed equity fund | 0.60%–1.00%+ |
| Specialist/niche active fund | 0.80%–1.50%+ |
These ranges are illustrative and vary by provider and fund; readers should always check the actual OCF stated in a fund's Key Investor Information Document (KIID) or equivalent disclosure document before investing, rather than relying on general ranges.
How the OCF can change over time
A fund's OCF is not necessarily fixed forever — it's typically recalculated at least annually based on the fund's actual costs and average size over the previous year, and can move up or down, sometimes because the fund manager has explicitly changed the charge, and sometimes simply because the fund's overall running costs have shifted relative to its asset base (a fund that shrinks significantly, for example, may see its OCF rise slightly, since fixed administrative costs are then spread across a smaller pool of assets). Investors holding a fund for the long term may find it worth periodically re-checking the current OCF on the fund's latest factsheet, rather than assuming the figure quoted at the point of purchase remains accurate indefinitely.
OCF discounts and share classes
Many funds are available in multiple "share classes" — different versions of essentially the same underlying fund and investment strategy, but with different charging structures. A common distinction is between a "retail" share class and a lower-cost "clean" or "institutional" share class, the latter often only available on certain platforms or above a certain minimum investment. Platforms increasingly negotiate access to the lowest available share class on behalf of their retail customers, but this isn't universal, and in some cases an investor could unknowingly be holding a higher-cost share class of a fund when a cheaper share class of the exact same fund and strategy is available elsewhere or even on the same platform under a different fund code. It is worth checking, particularly for funds held for many years, whether a lower-cost share class of the same fund has since become available.
How to find and compare a fund's OCF
- Look at the fund's factsheet or Key Investor Information Document, usually published on the fund provider's website and on most platforms' fund research pages.
- Compare the OCF against other funds pursuing a similar strategy or benchmark, rather than against unrelated fund types (comparing an actively managed specialist fund's OCF against a broad tracker fund's OCF isn't a like-for-like comparison).
- Add the OCF to the platform's own charge to estimate the total annual cost of holding the fund, as covered in the companion article on calculating platform fee plus fund fee total cost.
Does a lower OCF always mean a better outcome?
Not necessarily — cost is only one part of the picture, and the companion article on when a higher-fee active fund might be worth it looks at circumstances where a higher OCF could still be a reasonable choice for a given investor. But because past performance is not a reliable guide to future returns, while a fund's OCF is one of the very few things about a fund's future that can be known with certainty in advance, many long-term investors give cost a significant weighting when comparing similar fund options.
Comparing the OCF alongside other decision factors
None of this is to suggest the OCF should be the only factor considered when choosing a fund — the underlying asset allocation, the diversification a fund provides, and how well it fits an investor's overall goals and risk tolerance all matter enormously, and are arguably more important than cost when comparing two funds that pursue genuinely different strategies. Where the OCF becomes most decision-relevant is when comparing funds that are pursuing very similar or near-identical strategies (for example, two funds both tracking the FTSE All-Share Index), where cost differences are often the single most reliable distinguishing factor available, precisely because the underlying exposure is otherwise so similar.
A brief note on performance fees
A minority of actively managed funds charge a performance fee on top of their OCF, typically calculated as a percentage of returns achieved above a stated benchmark or hurdle rate, sometimes subject to a "high water mark" that prevents a fee being charged twice on the same gain. Performance fees are usually disclosed separately from the OCF rather than folded into it, and investors considering a fund that charges one should read the specific terms carefully, since the structure and fairness of performance fee arrangements can vary considerably between funds.
Why the OCF matters even when future returns are uncertain
It can feel odd to focus so heavily on a cost figure when the much larger driver of an investor's eventual outcome is the performance of the underlying investments themselves, which no one can predict with certainty. But this is precisely the logic behind giving the OCF real weight in decision-making: because future returns are uncertain and cannot be controlled, while the OCF is disclosed in advance and, for the holding period ahead, is one of the few things that can genuinely be known and compared before committing money. Focusing carefully on the knowable, controllable elements of an investment decision — cost being the clearest example — while accepting that the unknowable elements (future market returns) simply cannot be forecast reliably, is a reasonably common approach among long-term investors and financial commentators alike.
Key takeaways
- The OCF is a standardised annual percentage figure covering a fund's management and running costs, deducted directly from fund assets rather than billed separately.
- The OCF excludes portfolio transaction costs and any performance fees, so it is not literally the fund's entire cost.
- A seemingly small difference in OCF, such as 1 percentage point, can compound into a very large difference in outcome over 20–30 years, purely due to the mathematics of compounding.
- Long holding periods, such as those typical of pension saving, give fee drag more time to accumulate than shorter-term investments.
- The OCF should be compared against similar fund types pursuing similar strategies, and combined with platform charges to estimate the true total cost of investing.