A wealth management firm has named eight UK index tracker funds that it says are 'key offenders' for charging high costs for what should be low-cost products.
Bestinvest, a London-based financial planning firm, says it has identified £6.1 billion (€7 billion) of UK tracker funds where investors could slash annual costs by at least two-thirds.
There is a “chasm” in annual expenses between the cheapest and most costly funds that track the FTSE All Share Index. Costs range from 0.15% to 1.5%, a “staggering difference of 10 times”, says Bestinvest.
The eight retail UK index funds which each have over £100 million of assets and have annual costs that are “highly uncompetitive in today’s tracker market” are managed by Virgin, Legal & General (two funds), Scottish Widows Investment Partnership, Aviva Investors, Scottish Widows, Halifax and Marks & Spencer.
The costs within this list range from 0.8% for the Legal & General UK 100 Index R fund, and 1.5% for the Halifax UK FTSE All Share Index Tracker C fund.
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