Transaction costs

Transaction costs are incurred by our funds when investments are bought and sold. These can include transition manager fees, broker fees and commissions charged for carrying out the trade, taxes incurred when buying and selling different types of investments, and other costs. They are paid from the value of the fund and this is a normal part of the ongoing management of most of our funds. These costs are not included in the ongoing charge that appears on the Key Features Document, but represent a reduction in the fund’s investment return.

Changes to assets within our actively managed funds to reflect the new Investment Manager’s views of assets in the funds, economic forecasts and the market, will result in a short-term increase in these transaction costs.

For some of the funds a specialist transition manager will be used to manage the transition process cost-effectively over a short period. Efficient management of this process is an important part of a strong governance structure to protect asset values.

The transaction costs to the funds during the transition period will be capped, based on our estimate of what these might be, and monitored by us in order to limit their impact on short-term performance. The cap will vary dependent on the fund and is set at a level we consider to be appropriate, determined by our expectation of future performance (considering market volatility), up to a maximum of 0.75%.

Any amount above a transaction cost cap will be offset by a payment by Lloyds Banking Group into the fund.

We believe the changes made by the new Investment Managers will benefit your investment over the longer term. However, as part of our usual robust governance process, we’ll continually monitor their performance against the fund’s benchmark and other targets.

The significant majority of our products are invested in a multi-asset portfolio which, in turn, invests in several funds, some of which are not affected by this change. These portfolios may bear little, or no, increase in transaction costs depending on how they invest.

Further information

Independent advice

If you’re unsure about how any of these changes may affect your investments, we recommend that you speak to an independent adviser. If you don’t have an adviser you can find one at unbiased. Remember a financial adviser may charge for any advice they give.

You can find free and impartial money guidance from the government at www.moneyadviceservice.org.uk or by calling free:

0800 138 7777

Monday to Friday from 8am to 8pm, and Saturday from 9am to 1pm.

Glossary

It’s difficult to avoid jargon in financial services, so you may have come across some unfamiliar expressions. We’ve explained them here.

See glossary

Document library

View all documents relating to the fund changes.

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