Effective Annual Cost Explained

Old Mutual Unit Trusts is committed to Treating Customers Fairly. Old Mutual is a member of the Association for Savings and Investment South Africa (ASISA). ASISA members developed the Effective Annual Cost (EAC) measure to provide a standard disclosure of the charges that an investor will most likely incur when investing and holding a specific financial product.

The Effective Annual Cost (EAC) is a measure which has been introduced to allow you to compare the charges you incur and their impact on investment returns when you invest in different Financial Products. It is expressed as an annualised percentage. The EAC is made up of four components, which are added together, as shown in the table below. The effect of some of the charges may vary, depending on your investment period. The EAC calculation assumes that an investor terminates his or her investment in the Financial Product at the end of the relevant periods shown in the table.

Example of Effective Annual Cost Calculation:

Impact of charges

1 Year

3 Years

5 Years

Term to maturity
XX years4

Investment management 1.1% 1.1% 1.1% 1.1%
Advice1 0.5% 0.5% 0.5% 0.5%
Administration2 0.9% 0.9% 0.9% 0.9%
Other3 0.0% 0.0% 0.0% 0.0%
Effective Annual Cost 2.5% 2.5% 2.5% 2.5%

1. Advice charges

  • a. Fees negotiated with your adviser are accounted for here.
  • b. No adviser fees are applicable If direct client.

2. Administration charges

  • a. If you have chosen an Old Mutual Living Annuity product or your debit order amount is below minimum requirements, administration charges apply.
  • b. If not (a) above – No administration charges apply.

3. Other charges

  • a. OMUT does not have any other charges – No other charges apply.

4. Term to maturity

  • a. The actual number of years will depend on the type of product chosen:
  • i. If you are invested in a Retirement Product the number of years will be higher of “10 years” or “years to age 55” (for Retirement Annuity and Preservation Funds)
  • ii. If you are invested in any other product it will be 10 years (a Tax Free Investment; Standard Unit Trust and Living Annuity). The term to maturity of your investment depends on the type of product you invested in.