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In a report on multi-manager fee trends, the firm observed managers of managers reined in annual charges more effectively.

But funds of funds still managed to negotiate an average discount of 38 basis points on the fees on their underlying assets. Overall, Lipper maintained UK funds of funds were more forward in dealing with their costs than single-manager equivalents.

Ed Moisson, director of fiduciary operations in Europe at Lipper, said this trend was likely to continue. "The distribution landscape suggests that more power will pass into the hands of funds of funds to negotiate greater reductions in fee levels for the funds in which they invest," he said,

Lipper data demonstrated average fees on multi-manager products decreased on a discrete annual basis over the last three years.

They began at 2.51 per cent for unfettered funds of funds and 1.91 per cent for fettered funds of funds and managers of managers in spring 2005 and ended at 2.34 per cent and 1.84 per cent respectively in spring 2008.

Last year, fettered funds held an average TER of 1.81 pewr cent.

The report observed: "As the Ucits Simplified Prospectus becomes the Key Information Document, carrying with it the aim of making charges easier for investors to understand, it will be interesting to see what impact an increased awareness of charges will have on investors' fund selections."

Costs did not inhibit investors from favouring UK-domiciled multi-manager products over equity funds in the first quarter of 2008, however.

While equity funds saw outflows of £1.35bn, funds of funds had inflows of more then £250m.