Over the past 18 months, a price war has broken out among providers of unit and investment trusts, with many cutting their initial charges from the usual 5 per cent to 3 per cent or less.
The picture is similar for personal equity plans. Two weeks ago, the entrepreneur Richard Branson entered the fray by launching a Virgin PEP with no initial charges on its fund.
Other companies, such as M&G, have scrapped initial charges, replacing them with exit penalties if the PEP is sold in the first four years.
Matters are confused by fund managers that lower their initial charge but impose high annual fees of 1.5 per cent or more. This compares with others who only levy 1 per cent or so.
Roddy Kohn, a financial adviser at Bristol-based Kohn Cougar, said: "What happens is that people invest thinking that they are getting something cheap, only to find that they end up paying more in the long term because of the annual charge."
He said in many cases an initial 3 per cent charge followed by an annual levy of 1.5 per cent could prove more expensive over a few years than an initial hit of 5 per cent on a fund, followed by yearly fees of 1 per cent.
The picture is complicated further by the way unit trust initial charges do not always fully reflect the total setting-up costs, or "bid-offer" spread, which can add a further 1 per cent or more to the start-up bill.
Investment trust charges operate differently, as there are no management fees on the purchase of shares. However, normal stockbroking commission and expenses apply for buying and selling shares. These costs average 1.65 per cent, plus 0.5 per cent stamp duty on purchase. Where there are monthly savings schemes, charges are usually lower.
Annual management charges average 0.5 per cent of the trusts' assets, but this will vary according to the fund. For example, emerging markets may cost 1 per cent to 1.5 per cent annually.
There is also a stockbroking charge similar to the 1.65 per cent purchase cost when selling investment trust shares.
Investors' confusion over costs has led to repeated attempts by industry regulators to redefine the way the public is given information about charges.
Unit trusts were originally due to begin revealing charge information in a new way on 1 January, at the same time as life insurance companies.
But they won two reprieves by claiming that potential customers would be misled into thinking they were being offered a promise of a specific return if managers had to use a standard growth rate to show the effect of charges over time.
The Personal Investment Authority, an industry watchdog, is to commission more market research to test two alternative methods of disclosure. One will show the effect of charges on a fund growing at a standard rate. The other will indicate cumulative charges without any fund growth.
The result will be to delay the start of unit trust charge disclosure probably until somewhere between September and the end of the year.
The Securities and Investments Board, the City's lead regulator, is to put out a consultative paper in either April or May.