There is a danger that all passive funds are considered cheap and good value by definition he said, as criticisms of active managers charging ‘exorbitant’ fees have become the focal point of discussion.
But Miller, head of manager research, said investors should be wary of unjustifiably expensive index trackers charging over the odds.
He lists the Halifax UK FTSE 100 tracker fund and the Virgin UK Index Tracking Trust, with combined assets of £3.7bn, as clear examples of the practice.
Each lists an ongoing charge of 1% fee to track the FTSE 100 and FTSE All Share respectively.
Alternative funds in the market, such as BlackRock’s UK equity trackers and Fidelity’s Index UK, charge a significantly lower 0.06% for what is essentially the same product.
The iShares S&P 500 ETF, one of the largest in Europe with £8bn worth of assets, charges 0.4%, while the same firm offers a similar product, the iShares Core S&P 500 ETF which charges just 0.07%.
The Source S&P 500 charges less again, just 0.05%.
In emerging market trackers iShares also has different charges for two similar products.
The iShares MSCI Emerging Markets ETF, with £3.9bn of assets, charges 0.75%, three times as much as the iShares Core MSCI Emerging Markets tracker which has fees of 0.25%.
