Cost ‘chasm’ within UK index tracker fund sector

footprintsA 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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