Vanguard, the fast-growing low-cost asset manager, has once again attacked its rivals for overcharging customers, producing new figures that show how large fees damage returns for UK investors.

Its research shows the cheapest quartile of UK-based funds outperformed the most expensive quartile in nine of 11 significant categories during the past decade, undermining claims that the best managers are worth paying for because they deliver better performance.

The numbers will be a blow to the rivals of the $2.8tn US fund giant, which entered the UK market in 2009 with a promise to drive down fees.

The gulf in returns was most extreme for emerging market equity funds. Here the average cheap fund returned 12.3 per cent a year after fees, 3.1 percentage points better than the typical high-fee fund, according to the data, due to be published today.

The two categories where funds in the highest cost quartile managed to deliver better returns over the past decade were European equity and UK government bonds.

“Investors cannot control the markets but they can control what they pay. Low-cost funds have a greater chance of delivering investment success,” said Peter Westaway, Vanguard’s head of the investment strategy group in Europe.

Gina Miller, co-founder of SCM Private, the wealth manager that runs the “True and Fair” campaign for greater transparency in fund management, said: “This is no surprise. Costs are the biggest eroder of returns so the cheaper the fund, the more of the returns will end up in investors’ pockets.”

However Ms Miller said that while investors should be wary of paying relatively high fees for “ closet trackers” (actively managed funds that closely follow their benchmark index), genuinely active fund managers may merit a higher fee.

Strong gains for the UK and US stock markets in 2013 brought an improvement in the performance of active equity managers last year. However, the Vanguard data show most actively managed UK-based funds underperformed their benchmarks over five, 10 and 15 years to the end of 2013.

In the UK equity category, where active managers did best, more than half managed to outperform their benchmark between 1999 and 2013. But once funds that closed or merged due to poor results are accounted for, then just a quarter of active UK equity managers outperformed their benchmark over the past 15 years.

“We are not saying that it is impossible for an active manager to outperform. But costs are an absolutely critical factor in explaining why most active funds have a tendency to underperform,” said Mr Westaway.

Nick Hungerford, chief executive of Nutmeg, the online wealth manager, said: “Yet again this is another piece of research that proves [active] fund managers consistently underperform the market but somehow survive.”

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