Alan Miller: IMA fee claims are ‘misleading and untrue’

The chief investment officer hit back at IMA research that last week aimed to debunk accusations that fund charges are opaque and erode fund returns.

Mr Miller – who is launching a campaign to promote transparency in fund charges – told Investment Adviser the IMA was “missing the point”.

“Trading costs aren’t revealed: fund documents don’t disclose the bid/offer spread. All that is revealed is the stamp duty and commission costs.”

The IMA research was based on a review of the fund literature of 129 active and passive funds from the IMA UK All Companies sector.

The trade body claimed trading costs averaged 0.31 per cent of assets in active funds and 0.06 per cent for passive funds.

Adrian Lowcock, senior investment adviser at Bestinvest, also criticised the research.

“The annual management charge doesn’t include transaction costs, which you would think is part of managing the fund, and the total expense ratio is not a total. How are people supposed to understand that?” he said.

The IMA said in response to Mr Miller: “All charges levied by fund managers, and all dealing fees and taxes paid – that is, all costs incurred in the course of a transaction – are disclosed by law. Our analysis of net performance shows there is no such thing as hidden costs.”