Kinnell said one of the more conspicuous examples of the gap between published and actual returns came in US funds after the 2008 financial crisis, when flows into bond funds were misplaced as equities went on to outperform.
The research also shows that the gap between published ‘total returns’ and actual ‘investor returns’ widens the more expensive a fund becomes.
Within the firm’s UK Diversified Equities setor, the average cheap fund reported returns of 14.27% but in fact its investors enjoyed returns of 14.43%.
However, at the most expensive end the priciest fund reported 10.71% of gains where investors in fact experienced gains of 9.89%.
