Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration 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.
Citywire TV
Play Wealthify's Pearce: how online DFMs can build trust

Wealthify's Pearce: how online DFMs can build trust

In this video Cardiff-based Wealthify founder Michelle Pearce also discusses online DFM suitability failings and not being London-centric.

1 Comment Play Citywire Scotland: how wealth managers use new tech

Citywire Scotland: how wealth managers use new tech

We caught up with a few wealth managers at our annual event in Gleneagles to find out what technological innovations they are employing across their businesses.

1 Comment Play CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

Do not miss the first two minutes of this film as Richard Buxton shares how he has been challenged by a client for owning shares in a certain company.

Read More
Your Business: Cover Star Club

Profile: why this Brewin manager went solo before hitting 30

1 Comment Profile: why this Brewin manager went solo before hitting 30

More and more wealth managers are striking out alone, but few have the bottle to attempt this in their 20s

Wealth Manager on Twitter