The ongoing charges figure (OCF) is a standardised yearly percentage showing the cost of running an investment fund. It covers the manager's fee and other operating costs, letting investors compare fund expenses on a like-for-like basis.
In one line: The ongoing charges figure (OCF) is the standard yearly percentage capturing a fund's running costs for fair comparison.
How the ongoing charges figure (OCF) works
The OCF is a disclosure standard required under FCA rules. It bundles the annual management charge with administration, custody and audit costs into one figure, though it excludes dealing costs inside the fund.
For example, a fund with a 0.45% OCF costs 45 GBP a year on a 10,000 GBP holding, taken from the fund rather than billed separately, so it shows up as a small drag on performance.
Comparing OCFs helps reveal whether an actively managed fund's higher cost is justified versus a cheap tracker.
OCF vs a platform fee
The ongoing charges figure is the cost of the fund itself and is set by the fund manager. A platform fee is charged separately by the platform that holds the fund on the investor's behalf.
Total annual cost is the OCF of each fund plus the platform fee plus any transaction charges.
Primary source: FCA: Investments