There is no evidence of hidden costs for investors in managed investment funds, new research from the Investment Management Association (IMA) has revealed.
According to recent claims, undisclosed costs act as a drag on fund performance, but the IMA has refuted this, arguing that the actual cost of investing in the average UK tracker fund is broadly similar to the published Total Expense Ratio (TER).
In fact, according to the IMA, there is no evidence of hidden costs dragging the performance of tracker funds down. There is also no evidence of hidden costs for actively managed funds.
Commenting, Richard Saunders, chief executive at the IMA said: "The IMA's research explodes the myth that investors are subject to large hidden charges in their funds.
"Investing isn't cost free, but examination of the facts shows that both active and passive fund managers have a good story to tell."
According to the IMA, the top 10 per cent of actively managed funds in the UK All Companies sector delivered at least 64 per cent growth over five years, and where performance was lacking, it was more likely to be as a result of investment selection than hidden costs.
"Over the last 10 years the average actively managed UK fund has produced a performance which got investors their charges back, with many doing better when compared to the FTSE All Share Index.
"There is nothing to suggest that dealing costs drag down performance," Mr Saunders added.
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