It’sraretofindthatpricesforthebestproductsfall,whilethecostsoftheworstgoup–butinthetopsy-turvyworldoffunds,thisseemstobethecase。

InvestmentfundresearchgroupLipperFitzroviahasfoundthatindexfunds(whichsimplytracktheperformanceofagivenmarketorsector)arebecomingcheaper,withthetotalexpenseratio(TER)ontheaveragefundfallingto0。

94%ayearin2006from1。

12%in2001。

Thedrophasbeendrivenbyrisingcompetitionassmartinvestorsflocktothecheapestindexfunds–providerswhohavecutcosts“haveobtainedhigherfundinflowsasaresult”,writesJonathanDavisinTheIndependent。

Ontheotherhand,thecostofactivelymanagedfundsisontherise。

Therehasbeenasteadyincreaseinmanagementfeesoverthepastfiveyears,from1。

21%to1。

39%。

Andthere’snodrivetocutcosts。

“Infact,”asDavissays,“themainfocusofmanyfundprovidersistofindwaystoraisetheircharges”,with‘innovations’suchasperformancefeesandmorecomplicatedproducts。

Investorsshouldalsobeawarethatmorethanhalf(52%)oftheannualfeeonatypicalmanagedfundisduetocommissionpaymentsmadetoindependentfinancialadvisers(IFAs)。

Aswe’vepointedoutinMoneyWeekbefore,ifIFAsreallywereindependent,commissionchargeswouldbefalling–becausetheywouldhavenoimpactonanIFAs’recommendation。