From 31 May 2012, the Association of Investment Companies (AIC) will no longer publish Total Expense Ratios (TERs) on its website, replacing them with an ‘Ongoing Charges’ figure, which will be calculated by Morningstar using a new AIC methodology.

The AIC is also recommending to its members that they follow the new methodology when publishing an Ongoing Charges figure in their accounts, factsheets and on their websites.

The AIC’s methodology, and the new term Ongoing Charges, takes into account likely European rules for investment companies to produce Key Investor Information Documents. It has also taken into account the rules that open-ended funds currently have to follow, to ensure consistent approaches across open-ended and closed-ended funds, allowing easier comparison of competing products. This is particularly relevant in the context of the Retail Distribution Review.

Ian Sayers, director general of the Association of Investment Companies (AIC), said: “Having one single methodology for calculating Ongoing Charges will help to reduce inconsistencies and aid comparability for investors and advisers both between investment companies and between investment companies and open-ended funds.

“We are aware of growing calls for a total cost of ownership figure to be published which would include Ongoing Charges, but also the costs of advice, platforms and internal dealing costs. We believe the investment company sector has much to gain from supporting greater transparency in fund costs. The publication of the AIC’s methodology for Ongoing Charges is a key element in delivering this ultimate goal. Whilst it may take some time before a consensus is reached across the financial services sector on how the other elements would be incorporated, this is an important step forward.”