Beginner investors need to focus on fees: Tom Slater, Scottish Mortgage Trust

Published by Edmund Greaves on 24 October 2018.
Last updated on 24 October 2018

Tom Slater

Investors getting started now need to focus on the fees they are paying, according to Tom Slater, co-manager of Scottish Mortgage Trust.

Mr Slater, giving an exclusive interview to Moneywise, has one key recommendation for would-be investors, and that is to focus on fees.

Mr Slater says: “Fees might look small as a percentage of the fund or investment today, but when you work out the maths of that over the years it adds up to a huge amount of money.

“It is the one element of the investment that is guaranteed if you're investing in stock markets.”

Those considering investing need to look at the charges for the funds they hold, and also the fees a platform they hold investments on will charge for buying and managing their assets.

Scottish Mortgage Investment trust (SMT), a top performing fund and member of the Moneywise First 50 Funds for beginners, has cut its own fees this year.

SMT's five-year performance against its benchmark

Scottish Mortgage Trust five-year performanceSource: Morningstar, 23 October 2018

Explaining this decision Mr Slater says: “We've tried to both cut the charges and grow value.

“The trust's assets have grown meaningfully over the past few years, but we don’t believe in getting bigger for the sake of getting bigger.

“It only has value if we can use that scale to do things differently for our shareholders. One of the things that we can do is spread the costs over a larger base, sharing the benefits of scale by cutting the fees.

“We've increased the proportion of the trust that is invested in successful private companies. It’s very difficult to get access to these types of investment opportunities. Most of the structures which are available charge substantial fees, often 2%, and some share of performance.”

SMT’s current ongoing charging figure is 0.37%, lower than many competitors.

Mr Slater also discusses the fund’s top holdings, why he is positive about the outlook for China, and what his first ever personal investment was.

Read the full interview for more.

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