In the August 2016 UBC FPP Update, we provided an overview of the fees that are charged by each of the five investment funds available to FPP plan members. The Fund Management Fee (FMF) of each of the investment funds at the end of March 31, 2017 are shown below.
|Fund||Annualized FMF Percentage|
|UBC FPP Balanced Fund||0.47%|
|UBC FPP Bond Fund||0.35%|
|UBC FPP Canadian Equity Fund||0.44%|
|UBC FPP Foreign Equity Fund||0.48%|
|UBC FPP Short Term Investment Fund||0.17%|
The FMF shown in the table are percentages. The FMF can also be expressed as basis points – 100 basis points is equal to 1.0%. The Balanced Fund FMF is 47 basis points.
The FMF is also shown on your quarterly member statement. In order to determine a rough estimate of the amount of money that you are paying on an annual basis for the FMF, multiply the average amount of assets you had invested during the calendar year in the investment fund by the FMF. For example, assume you had $200,000 in the Balanced Fund at the beginning of the year, and $224,000 in the Balanced Fund at the end of the year.
Step 1 – Determine the average account balance during the year
(200,000 + 224,000) / 2 = $212,000
Step 2 – Multiply the average account balance by the FMF
$212,000 x 0.47%, or $212,000 x (0.47/100) = $996.40.
This is a very simplistic method to determine a rough estimate of the amount of the annual fees that you are being charged. In practice, the fees are charged on a daily basis based on the asset value on each day which changes due to additional contributions and investment income. As well, the FMF can change monthly as the size of the Plan’s assets change.
For more information about fees, please refer to the article Why Fees Matter.