More than a fifth of investors would refuse to pay an ongoing charge of 0.75 per cent for an actively managed UK equity fund, meaning they miss out on 90 per cent of the funds available in the market.
An FE Trustnet poll of 2,637 advisers and investors also found 37 per cent would not be prepared to pay more than 1 per cent for an active UK equity fund.
The findings come at a time when the fund management industry is under increased scrutiny over its charges and fees, particularly in the wake of the Retail Distribution Review which forced advisers and fund managers to be explicit about charges.
According to FE Analytics data, the charge for the average active fund is 0.998 per cent, meaning the vast majority of funds in the IA UK Companies, IA UK Equity Income and IA UK Smaller Companies sectors would be ignored.
By contrast, those who would not pay more than 1 per cent are limiting themselves to 70 per cent of UK active funds in the market.
This means they would miss out on highly popular funds such as Old Mutual UK Dynamic Equity, Trojan Income and Standard Life Investments UK Equity Income Unconstrained.
Active managers have felt the pressure to compete with the ever-growing passive fund industry, with index-linked ‘tracker’ funds being available at a cheaper price.
katherine.denham@ft.com
