Investment Fees Slammed By Top Fund Manager

The investment industry has been slammed by one of Britain's most respected fund managers, over fees charged to customers.

Neil Woodford said many banking and investment sector funds have charged fees for actively managing deposits that basically track equity markets, often with mediocre performance.

As a result of constraints placed on the funds, added value is not accrued - despite investors paying a premium.

He told Sky News: "The fund management industry has too often been guilty of charging active fees on funds for index performance or worse."

Mr Woodford is head of investment at Woodford Investment Management, and was appointed CBE last year for services to the economy.

He is responsible for investments of more than £2.6bn, and previously played a crucial role in equities at Invesco Perpetual for nearly 27 years.

He said canny investors are now becoming more aware of fees and the Financial Conduct Authority's (FCA) push to make companies more transparent in fee structures.

Mr Woodford added: "The pressure on fund fees is increasing - investors are waking up to higher charges and with the help of the regulator this will see fund fees come down."

In response, the FCA told Sky News: "Firms must present their fund charges clearly and fairly. We will follow up on our 2014 review to ensure firms put right poor practice."

Direct investment in equities is seen as an alternative to lacklustre funds

In May, the FCA released a report after examining marketing information given by 11 companies to retail investors.

The FCA wants firms to be "clear and consistent" in showing fees so that potential customers can compare charges before deciding on where to invest.

According to the Investment Management Association (IMA), as of July, £806.5bn was under fund control in Britain.

It said £1.9bn was invested in the month by retail customers - compared with £690m by institutional entities.

Of this July figure, the IMA said £1bn was put into UK equity income and £532m into tracker funds.

IMA chief executive Daniel Godfrey told Sky News: "The IMA recognises that improvements in simple disclosure of costs and accountability are needed and is committed to a number of measures that will deliver that.

"We have developed a new disclosure that requires all costs to be reported in a comprehensive and simple pounds and pence per unit figure every year. This will be effective next spring.

"We have further work in progress to deliver similar simple transparency covering the impact of the indirect transaction costs incurred by funds.

"This all goes beyond any regulatory requirement and is designed to give consumers what they need to make better decisions and informed choices."

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