A tribute to Jack Bogle flashes on to screens at the New York Stock Exchange

Jack Bogle, the founder of Vanguard who died on Wednesday, succeeded in his 89-year life in reducing the cost of investing for millions of ordinary savers.

More battles over fund costs lie ahead. Large discrepancies still exist between the performance of actively managed mutual funds used mainly by retail investors and comparable institutional accounts, which are reserved for large investors such as pension schemes or sovereign wealth funds.

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Institutional accounts have big minimum investment requirements and carry lower fees than mutual funds. As a result, significantly more mutual funds underperformed their benchmark over 10 years than institutional accounts in the same category, according to an analysis by S&P Dow Jones Indices.

Almost 90 per cent of actively managed mutual funds that benchmark against the S&P 500 underperformed the index after fees over the 10 years ending December 2017. Over the same period, 58.8 per cent of S&P 500 benchmarked institutional accounts underperformed once their lower fees were taken into account. Annual fees for mutual funds in this category averaged 104 basis points compared with 78bp for institutional accounts.

Even larger discrepancies occur in other sectors. More than 80 per cent of global and emerging market mutual funds underperform after fees compared with less than half of the institutional accounts benchmarked against the same underlying indices.

In fixed income markets, direct comparisons between the net performance of mutual funds and institutional accounts are more challenging due to wrinkles in the classification system.

However, the underlying message about the greater impact of fees on the performance of mutual funds in fixed income remains unchanged.

The unanswered question is whether ordinary retail investors are being treated fairly by active managers who undoubtedly know that higher fees significantly reduce their chances of beating a comparable low-cost tracker fund.

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