Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

IA: Hidden fees are the industry's 'Loch Ness Monster'

IA: Hidden fees are the industry's 'Loch Ness Monster'

 The Investment Association (IA) has dismissed accusations funds contain hidden fees, likening them to the 'Loch Ness Monster' in new research.

The trade body is set to launch a public consultation this year on the delivery of a new disclosure code, but it has published a report that suggests fears over hidden fees are 'misplaced'.

The report - carried out with Fitz Partners - subtracted accurate averages of fees and charges from benchmark index returns to establish post-fee returns, them compared these with the actuarial net returns from funds across numerous sectors.

The IA found that the average bundled ongoing charge figure is 1.42% and the average transaction cost in a fund is 0.17%. The combined figure results in a 1.59% hit to performance. 

It also found funds on average performed better than markets they invest in by 0.71% on an annualised basis between 2012-2015.

IA director of public policy Jonathan Lipkin (pictured) said: 'The industry should be judged on its actual delivery, not on perceptions of delivery. Our research with Fitz Partners is a detailed empirical analysis of equity fund performance in the context of quantified charges and costs,' said

'If you look at the actual performance delivered to fund investors, this is the proof point and we do not see evidence of high transaction costs, either explicit or implicit.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Your Business: Cover Star Club

Profile: How Julius Baer plans to win UK wealth

2 Comments Profile: How Julius Baer plans to win UK wealth

Julius Baer has embared on a hiring spree to fuel its ambitious UK expansion plans.

Wealth Manager on Twitter