In a blog on the trade body’s website, the recently appointed chief executive of the Investment Management Association said one solution to the “vexed question” of simplifying the costs of investing in retail funds would be to calculate the total costs incurred by a fund for the past year.
These costs could then be apportioned to each fund unit to work out what the cost should be to investors.
Gina Miller, founder of the True and Fair campaign on costs and transparency and co-founder of boutique asset management company SCM Private, said: “This is fantastic rhetoric – and something we have been doing for a long time.
“However if it is so simple, why hasn’t the wider fund management industry been doing this for years and disclosing this clearly to investors?”
She said that the majority of the IMA’s members have not signed up to the association’s voluntary code of enhanced disclosure. The latest figures show that only 35 members have signed up to its latest attempt at clarity.
Ms Miller said: “And those who have, well, we have been shocked at how high some of the figures have been, even in bond funds, and some management groups haven’t even shown how high the spread can be.
“One of the few management companies to get it right with its disclosure has been St James’s Place which clearly shows the actual breakdown of costs on its website.”
She added that investors still do not know the total cost of investing, which might include platform fees or advisory charges, but admitted that the enhanced disclosure was a ‘baby step’ towards that goal.
Adviser view
Ian Gorham, chief executive of Bristol-based Hargreaves Lansdown, said he thought the idea of retrospective pricing would help with moves towards better transparency. He said: “We support this IMA initiative and we hope that fund management companies will do the same. It is an opportunity to reform cost presentation to make it simpler and more comprehensive.
“The UK public should invest more and investing in funds is a great option for a starting retail investor. The more a product is simple and trustworthy, the more likely people are to be attracted to invest in it.”
