Well respected names in the pension industry routinely live off their reputations and charge rip off fees for Index trackers.
A quick survey of 50 funds on Trust Net revealed that while most funds did not charge rip off fees, there are exceptions. In the worst cases Annual Management fees of up to 150 bp are being charged.
The difference in return over 5 years could be as high as 15% on UK and over 23% on US tracker funds.
Several firms offered more than one tracker – with differing returns – linked to the level of charges.
The analysis is indicative and only surveyed a small sample of funds.
Advice is to check the charges and returns on funds you are invested in against their peer group and the benchmark.
One US tracker showed the North American Index as its benchmark to make it look like it has over performed.
UK FTSE All Share Tracker
Best in class over 5 years
Aviva Blackrock UK 62.8% return
LG Equity index PMC 17 62.3%
Worst in class
Royal London FTSE All share 48.7%
Scottish Equitable UK Index 52.7%
Pru M&G index 53.7%
L&G North Am Equity Index 138.6%
MetLife N Am 127.8%
Aviva L&GAvivaMym US Equity 148.3%
OMW iShares US Equity 124.9%