Tony Wilkinson, a director of Morgan Grenfell Asset Management, would not commit himself to a cut but said the company was reviewing charges.
This has been prompted partly by the way they are causing the performance of the fund to drift away from the FTA All Share Index. The effect of these charges becomes clearer over a number of years, because management fees are levied annually.
Morgan Grenfell's UK Equity Index Tracker, for example, made a profit of 36.69 per cent over the three years to the beginning of this month, according to figures from Micropal, after reinvestment of taxed dividends. The All Share index increased 48.67 per cent, assuming net income from the index was reinvested.
Norwich Union's index-tracking fund increased 36.78 per cent over the same three-year period while James Capel's rose 38.6 per cent. The fund managers all blame charges for the drift. These account for the bulk of the difference between the buying and selling price of units in the funds. On most of the index funds, this is well over 5 per cent.
Micropal statistics take account of spreads to show the real return to investors.
Last year Gartmore abolished the front-end charge on its UK Index fund. It still has an annual charge, of 0.5 per cent, but the spread is less than 2 per cent.
As a result, its return over three years is only marginally adrift of the All Share over three years at 47.5 per cent. This is a slightly misleading picture of the return obtained by people who invested three years ago, because they would have paid a front-end charge, but it highlights the effect of charges.Reuse content