## Are outves

"The fees displayed in your calculator differ to Outvest's fees as shown on their website. Why?" (email from reader)

**It is true.** The fees I show in my calculator differ to the fees given on the OUTvest website. In this article, I dig why these fees differ & what I believe you should take into account when comparing fees across different RAs.

**Let us start at the beginning.** Here is what OUTvest shows on their website.

According to OUTvest you pay ONEfee according to the table below

- 1.5% per year for portfolio amounts smaller than R315 000.
- A flat fee of R4 725 per year + inflation if your value is between R315k and R2 362 500
- 0.2% per year for portfolio amounts greater than R2 362 500.

**This is different to what I take into account in my calculator. What does my RA fee calculator use for calculating OUTvest fees?**

- 1.5% + 0.29% per year for portfolio amounts smaller than R315'000.
- A flat fee of R4 725 per year + 0.29% if your value is between R315k and R2 362 500
- 0.2% + 0.29% per year for portfolio amounts greater than R2 362 500.

And thus we end up with a difference when using my calculator

**This is quite a difference from what Outvest is highlighting on their website. What's the difference?** 0.29%. That is the difference between what I use in my calculator vs fees shown in OUTvest's fee chart.

Portfolio amount | OUTvest fee | My calculator | Difference |
---|---|---|---|

smaller than R315'000 | 1.5% per year | 1.5% + 0.29% | 0.29% |

between R315k and R2 362 500 | R4 725 per year | R4 725 + 0.29% | 0.29% |

greater than R2 362 500 | 0.2% per year | 0.2% + 0.29% per year | 0.29% |

**Where does that additional 0.29% come from?** It is the TIC, or Total Investment Cost, of the underlying investment.

I am using the **OUTvestModerate Index fund** in my calculator as this is a Reg28 compliant fund (note, the OUTvest Aggressive index fund is not Reg28 compliant & thus cannot be used for RA investments) and sits in the High Equity ASISA sector. Thus is most appropriate choice for majority of individuals looking for an RA.

**Why take into account the TIC of the underlying investment?** In order to make a true comparison across different RAs, you should take into account all fees. These are admin or platform fees, total investment cost of the underlying investment and advisor fees. I am omitting advisor fees from my calculator, but I am taking into account both the admin fee and the total investment cost of the underlying investment.

**What makes up Transaction costs? A focus on Total investment costs.** Transaction costs can be high when funds experience large inflows.