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Direct fees and indirect costs
What are direct fees?
The ‘Total fees you paid’ section of your statement shows the total amount of direct fees deducted for the reporting period. These fees are deducted directly from your cash account.
Direct fees are individually itemised in the detailed transactions section of your statement. Typically, these fees relate to activities such as processing contributions and account maintenance.
What are indirect costs?
Indirect costs are not charged directly to your individual account – they are shared by all members of each individual managed investment option that you have chosen to invest in. These typically include investment expenses, audit fees, accounting fees, and government compliance and reporting costs.
Indirect costs are deducted from the managed investment option before the calculation of unit prices and/or crediting rates.
These costs will appear on your statement as an Indirect Cost Ratio and, depending on the product, may also be presented as Other Management Costs.
Indirect costs - Indirect Cost Ratio and Other Management Costs
Indirect Cost Ratio (ICR)
This is the ratio of indirect costs to the total investment in the managed investment option. The ratio is calculated periodically by the investment manager and is expressed as a percentage. It is used to calculate Other Management Costs.
The ICR for a managed investment option is the same for all people who have chosen that investment.
Please refer to the product disclosure statement for each underlying investment in your portfolio to determine the ICR.
Other Management Costs (OMC)
OMC show, as an approximate dollar value, your portion of the indirect costs of the managed investment option. These costs are deducted before the calculation of unit prices and/or crediting rates. These are not deducted directly from your account.
OMC is only shown in the ‘Total fees you paid’ section of your statement.
How is OMC calculated?
OMC is determined by multiplying your average account balance for the reporting period by the Indirect Cost Ratio.
Your average account balance | . . X | Indirect Cost Ratio (ICR) | . . = | Other Management Costs (OMC) |
Example 1: Other Management Costs calculation
 | Your average account balance | | ICR | | OMC |
| Example investment | $5,000 | X | 2% | = | $100 |
What if you have more than one managed investment option?
Individual OMC calculations will be performed for each of your managed investment options during the reporting period. These amounts are then added together and presented as a single total OMC dollar amount on your statement.
Example 2: Other Management Costs calculation
| Your average account balance | | ICR | | OMC |
| Investment A | $5,000 | X | 2% | = | $100 |
| | | | | |
| Investment B | $7,000 | X | 1.5% | = | $105 |
| Total Other Management Costs (shown on statement): | $205 | ||||
Why is OMC approximate?
OMC is described as an approximate and should only be used as a guide since it is based on two variables:
- your average account balance (which changes daily), and
- ICR (which is calculated periodically by the fund manager).
