About the EAC Calculator The Effective Annual Cost (EAC) measure is a standardised disclosure methodology that can be used by investors and advisors to compare the total charges on most retail investment
products and their impact on investment returns so that investors are able to make better informed decisions around retail savings and investment product options. For more detailed information regarding EAC calculations please
refer to the EAC Standard on the ASISA website (www.asisa.org.za). For EAC calculations regarding your investment product please refer to the EAC calculator.
comprises four separate components into which various charges are allocated. The components are:
- investment management charges;
- advice charges;
- administration charges; and
- other charges.
EAC is calculated separately for each of these four components and then added together to derive the EAC for the financial product as a whole and shown in a table. VAT is included in all charges where applicable.
1. Investment management charge The Investment Management Charge component includes all costs and charges for all underlying investments. In the absence of TER or Transaction Costs, an equivalent
charge calculated according to the principles in the ASISA Standard may be used. This charge is calculated on historic data and may change over time. Where more than one underlying instrument is selected, the charge that is included
in the table will be the weighted average charge of the selected portfolio.
2. Advice charge All charges that an investor incurs for the provision of financial planning by an adviser or a representative (as defined in FAIS) are included in the Advice Charge. Annual advice
fees will have the same impact over the various terms. Initial advice fees however, will have a greater impact initially and will reduce over the long term. The impact of initial advice fees on recurring investments will be much
higher than the actual charge over the short term and may be as high as double the actual charge after one year. The greater impact of initial advice fees over the short term is due to the limited period of time that the investment
has to recover these charges and start showing a positive return. Where there is no Advice Charge this is reflected as 0.0%.
3. Administration charge The Administration Charge component includes all charges that an investor incurs relating to the administration of a financial product. This charge may be reflected as
zero where the portfolio consists of Ashburton investments only, or may reduce over time where a sliding scale fee structure applies.
4. Other chargesThe Other Charges calculation is only shown if it is not a zero value and includes all termination charges, penalties or loyalty bonus payments that are reasonably foreseen if
the investor terminates his or her contract and withdraws all of the funds at the end of the disclosure period. This fee contains any remaining charges that will be levied against the financial product. Ashburton Investments does
not levy any Other Charges and therefore this charge will not reflect in the table.
|Charges|| 1 Year|| 3 Years|| 5 Years || 10 Years |
|Investment management ||1.2%||1.2%||1.2% ||1.2% |
|Advice||1.8%|| 1.0%||0.8% ||0.7% |
|Administration|| 0.0%||0.0%||0.0% ||0.0% |
|Effective Annual Cost (EAC)|| 3.0%||2.2%||2.0% ||1.9% |
The table illustrates an investment of R100 000 into the Ashburton Balanced Fund with an initial advice fee of 1% and an annual advice fee of 0.5%. No platform administration fee is charged on Ashburton Funds and therefore the charge
is reflected as zero. All charges are inclusive of VAT.
The calculator operates in Microsoft Office Excel.
To download the calculator, click here.