IN RECENT years, we have all become used to the idea of consumer boycotts, where pressure - on supermarkets, public corporations, even whole countries - is exerted by individuals acting collectively to achieve a common goal.

So familiar has this tactic become that we should not be too surprised when it is used, not in favour of "the common good" - if such a concept actually exists - but purely to continue a practice which has helped to line someone's pockets over the years.

This is what has happened with the fund management industry's response to CATmarking, the Government's attempts to bring down the cost of investing in its Individual Savings Accounts (ISAs).

When investors put money into most equity-linked ISAs, they pay an initial fee of 5 to 6 per cent, plus the annual management charge, which averages between 1.25 and 1.5 per cent. By contrast, the Treasury's CATmarks (CAT stands for costs, access and terms) aim to set a 1 per cent annual ceiling on charges, including initial fees.

Not surprisingly, most fund management groups are opposed to CATmarks: they would find themselves unable to pay financial advisers commission on sales of their products. And there is little left over for the admin work involved in putting the plans they sell on their books.

Knowing that they can't appeal to us on the basis of their own greed, however, fund managers try another tack. Charges, they say, are a mere distraction to the fundamental issue facing investors, which is that of performance. A good manager will earn his fees many times over, we are told.

So convinced is the industry in the strength of its argument that it has mounted a boycott of CATmarks. Out of the 1,871 ISA funds available, only 29 have the CAT benchmark, many of them low-cost "trackers" which simply follow various stockmarket indices.

This is not to say that a more competitive approach is not possible: Norwich Union markets more than a quarter of all CATmarked funds currently available. But the majority of other companies refuse to play along.

Clearly, it is too early to compare the performance of CATmarked ISAs against their non-benchmarked rivals. But here is an initial pointer to the way things may be going. Fitzrovia International is a company which specialises in providing a wide variety of financial statistics.

What it has done is compare how CATmarked funds have performed in the three months to the end of June, relative to those which charge as much as they like. Subject to the imbalances that will affect any comparisons, it found that there was little difference between high- and low-charging funds in terms of investment performance

But when it came to what each type of fund was actually worth if sold tomorrow, the difference was striking. CATmarked funds were consistently ahead of their more expensive rivals by a margin of about 5 per cent. Why? Because that's the initial charge investors have to pay for non-CATmarked funds.

Of course, in the long term, it is entirely possible for high-charging funds to overcome the handicap caused to them by their initial charges. But I wouldn't hold my breath. All the more so because there is the continuing problem of annual management fees - where the average disparity is a further 0.3 per cent a year.

The moral for investors is that cost is a critical factor when considering the relative merits of funds in most sectors. And for those who take a slightly more ethical approach to the financial services industry, the lesson is - not all boycotts are morally justified, certainly not this one.

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