Effective Annual Cost (EAC) is a measurement aimed at standardising cost disclosures across different investment products. EAC is expressed as a percentage of the investment amount. It provides a summary measure of cost across four components, namely investment management charges, advice charges, administration and other charges. The aim is to help investors make better informed decisions about the costs they are likely to incur when investing and the impact these charges could have on investment returns. However, it does not measure the features of a product.

The measure was introduced by the Association for Savings and Investments South Africa (ASISA) to help align the investments industry more fully with the principles of Treating Customers Fairly (TCF). ASISA provides clear guidelines on how EAC should be calculated and disclosed for investment products. EAC is aimed at helping clients compare costs across different investment products.

EAC is a summary measure derived from four components: investment management charges, advice charges, administration and other charges. ASISA prescribes how costs are classified as well as the calculation periods. The disclosure periods are one year, three years, five years and 10 years for unit trust investments. In terms of the prescribed calculation methodology, it is assumed that the client disinvests fully at the end of each of these periods. The ASISA standard on EAC is available on the ASISA website at www.asisa.org.za.

We provide you with the EAC, which is the industry standard for investments. We will provide EAC information annually for new investments and whenever an investment transaction occurs that impacts the cost of your investment. Investment transactions that impact your cost include additional investments, increases in debit orders, and changes to a fee arrangement with your adviser.