Investors often look at platform charges and fund charges as two separate questions — which platform to use, and which fund to buy — but the number that actually matters for long-term outcomes is the combination of the two: the total, all-in annual cost of holding a specific fund on a specific platform. Two investors could each believe they've found a "cheap" option by looking at only one half of the equation, while still ending up with a surprisingly expensive combined cost.
The two layers of cost
Platform charge
Charged by the platform (broker, SIPP provider, or fund supermarket) for holding the account and administering the investments. As covered elsewhere on this site, this can be a flat fee, a percentage fee, or a capped percentage fee, and may include separate dealing charges.
Fund charge (OCF)
Charged by the fund itself for its management and running costs, deducted directly from the fund's assets before the platform ever sees the money — see the dedicated article on the OCF for a full explanation.
Because these two charges are deducted in different ways, by different organisations, at different times, it's easy for an investor to see only one of them clearly (typically the platform fee, which often appears on a statement) while the other (the OCF) remains invisible, baked into the fund's reported performance.
How to calculate the true all-in cost
The calculation itself is simple addition: platform charge (as a percentage of the portfolio, or converted to a percentage-equivalent if it's a flat fee) plus the fund's OCF, plus any relevant dealing charges. The complexity lies not in the maths but in remembering to actually do it — since the two figures usually appear in entirely different documents.
- Find the platform's annual charge, expressed as a percentage of the portfolio value (or work out the percentage-equivalent of a flat fee by dividing it by the portfolio value).
- Find the OCF for each fund held, from its Key Investor Information Document or factsheet.
- If the portfolio holds several funds, calculate a weighted average OCF across the whole portfolio, based on how much is held in each fund.
- Add the platform charge and the weighted average OCF together for the total ongoing annual cost.
- Add any expected dealing charges, if applicable, for a fuller picture including transaction activity.
A worked hypothetical example
Suppose an investor holds a £75,000 portfolio split across three funds on a single platform:
| Fund | Amount held | OCF |
|---|---|---|
| Global equity tracker | £45,000 | 0.12% |
| UK equity income fund | £15,000 | 0.75% |
| Bond fund | £15,000 | 0.20% |
The weighted average OCF is: (£45,000 × 0.12% + £15,000 × 0.75% + £15,000 × 0.20%) ÷ £75,000 = (£54 + £112.50 + £30) ÷ £75,000 = £196.50 ÷ £75,000 ≈ 0.26%.
If the platform charges 0.25% a year on top, the total all-in annual cost is roughly 0.51% — around £383 a year on this £75,000 portfolio. Looking at the platform charge alone (0.25%, or £188) would have understated the true cost by more than half.
Why this combined figure matters more than either number alone
A platform that looks cheap on its headline fee but only offers access to higher-cost funds could end up more expensive overall than a slightly pricier platform offering a wide range of low-cost tracker funds. Equally, a very low-OCF fund held on an expensive platform doesn't deliver the full benefit of its low running cost. The combined figure — sometimes referred to informally as the "total cost of ownership" or "reduction in yield" — is the number that actually determines how much of the underlying investment return an investor keeps.
Comparing total cost across different scenarios
| Scenario | Platform charge | Fund OCF | Total annual cost |
|---|---|---|---|
| Low-cost platform + tracker fund | 0.25% | 0.10% | 0.35% |
| Low-cost platform + active fund | 0.25% | 0.85% | 1.10% |
| Higher-cost platform + tracker fund | 0.45% | 0.10% | 0.55% |
| Higher-cost platform + active fund | 0.45% | 0.85% | 1.30% |
This hypothetical comparison illustrates that platform choice and fund choice interact — the gap between the cheapest and most expensive combination (0.35% versus 1.30%, a difference of 0.95 percentage points) is nearly three times as large as either individual choice alone.
Building a simple personal spreadsheet
Many investors find it useful to keep a simple running record of their total cost calculation, updated whenever a fund is bought, sold, or switched. A basic version needs only a few columns: the fund name, the amount held in it, its current OCF (checked periodically, since OCFs can change, as noted in the companion OCF article), and the platform charge that applies to that holding. From these, the weighted average calculation shown above can be repeated in a couple of minutes, and comparing the result year to year is a useful, low-effort way of noticing cost creep — for example, if a series of small fund switches has gradually shifted a portfolio from mostly low-cost trackers toward a higher proportion of pricier active funds without any single decision feeling significant at the time.
What to include and what can reasonably be left out
For most long-term investors, platform charge plus weighted average OCF captures the overwhelming majority of the total ongoing cost, and is a reasonable stopping point for a periodic personal review. Portfolio transaction costs (covered in the dedicated article on transaction costs and stamp duty) add further precision but require digging into more detailed disclosure documents that aren't always readily available fund by fund, and for most diversified, moderate-turnover portfolios they add a relatively small amount on top. Including them is more valuable when comparing a low-turnover tracker against a high-turnover active fund, where the gap can be more meaningful, than when comparing two similar low-turnover tracker funds against each other.
How platform and fund costs interact with tax wrappers
The total cost calculation described here applies identically whether a fund is held within an ISA, a SIPP, or a General Investment Account — the platform charge and fund OCF don't change based on the tax wrapper used. What does change is the relative importance of minimising cost, since a tax-efficient wrapper is itself already reducing the investor's overall tax drag; a saver who has used their full £20,000 ISA allowance and £60,000 pension annual allowance (2025/26 figures, always worth checking for the current tax year) and is also investing through a taxable GIA may find that cost efficiency in the GIA matters just as much as tax efficiency, since neither is guaranteed and both compound over time in similar ways.
Other costs worth folding into the total, where relevant
- Dealing charges, if the investor trades funds or shares regularly rather than using a free regular investment scheme.
- Portfolio transaction costs disclosed separately by the fund (see the article on transaction costs and stamp duty), though these are typically smaller and harder to obtain precisely than the OCF.
- Any advice fee, where a financial adviser is involved, which sits entirely outside both the platform charge and the fund OCF.
Practical habit worth building
Reviewing the combined platform-plus-fund cost once a year, or whenever switching funds or platforms, helps ensure that a portfolio hasn't drifted into an expensive combination simply through incremental choices — for example, gradually adding a few higher-cost active funds to what started as an all-tracker, low-cost portfolio, without ever recalculating the new blended cost.
A worked hypothetical example showing total cost across a full switching decision
Consider an investor reviewing whether to switch platforms and simplify their fund selection at the same time. On their current setup, they hold £90,000 across a platform charging 0.40% with a weighted average fund OCF of 0.55% (a mix of active and passive funds), for a total annual cost of 0.95%, or £855. They're considering moving to a platform charging 0.25%, while also consolidating into a smaller number of lower-cost tracker funds with a weighted average OCF of 0.15%, for a new total annual cost of 0.40%, or £360 — an annual saving of £495. Suppose the new platform also charges a one-off exit-related cost from the old platform of £75 (per the discussion in the article on hidden platform costs). Even after that one-off cost, the saving is recovered well within the first two months, and continues to accrue every year afterwards. This kind of combined calculation — weighing a one-off switching cost against an ongoing annual saving from both a cheaper platform and lower-cost funds together — is often where the most significant total cost improvements are found, since platform and fund choices compound together rather than independently.
A note on the limits of any single cost figure
Even a carefully calculated total cost figure is, ultimately, a snapshot based on current charges and current holdings — it doesn't account for how a portfolio's composition, and therefore its weighted average OCF, might change over time as an investor buys and sells different funds, nor does it capture dealing charges from future transactions that haven't yet happened. It's best treated as a useful planning and comparison tool, recalculated periodically, rather than a single number fixed for life. Investors who find this kind of calculation genuinely useful often build it into an annual portfolio review, alongside checking whether asset allocation still matches their goals and risk tolerance, since cost review and broader portfolio review naturally complement each other at the same point in the year.
Key takeaways
- The platform charge and the fund's OCF are two separate costs, deducted in different ways, and both need to be added together for the true annual cost of holding an investment.
- A weighted average OCF across multiple funds gives an accurate combined fund-cost figure for a diversified portfolio.
- A cheap platform paired with expensive funds, or a cheap fund held on an expensive platform, can both result in a higher total cost than expected.
- Dealing charges and any advice fees should be added on top of the platform-plus-OCF figure for a fully complete picture.
- Recalculating the total annual cost periodically helps catch portfolios that have drifted into a more expensive combination over time.