Three-quarters of respondents say they wouldn’t even consider investing in a fund that had a total expense ratio (TER) of more than 2 per cent.
This automatically excludes a number of strong investments, with data from FE Analytics showing there are 58 funds with a TER of 2 per cent or more that have achieved top-quartile performance in their sector over three years.
Jupiter Merlin
Multimanager funds tend to have higher charges, as on top of the fund provider’s charges there are the charges of the underlying funds to be paid.
The TER on the Jupiter Merlin Worldwide and Jupiter Merlin Growth funds is 2.57 per cent, and it is 2.41 per cent on the other two funds in the range, high numbers even for a multimanager portfolio.
They can make a claim to justify these charges with their long-track record of beating their peers.
The three of the four funds with a ten-year history have top quartile returns over that period, Jupiter Merlin Growth returning 166.3 per cent to investors, Jupiter Merlin Income 117.04 per cent and Jupiter Merlin Worldwide 147.71 per cent.
The Growth and Income funds along with Jupiter Merlin Balanced also have top-quartile returns over five, three and one year periods.
You can gain access with a minimum investment of £500.
TB Amati UK Smaller Companies Fund
FE Trustnet research has shown that smaller companies funds outperform their all company cousins on a risk-adjusted and absolute weighting.
They tend to be more expensive due to the extra costs of dealing incurred by the managers, and TB Amati UK Smaller Companies has a TER of 2.19 per cent.
The portfolio has a Five FE Crowns rating, and has soundly-beaten its sector average over five years, returning 17.23 per cent against the IMA UK Smaller Companies sector’s 2.74 per cent.
Performance of fund versus sector over five years
Source: FE Analytics
The fund has 16.5 per cent in cash, with the managers saying in their most recent report to investors that the macro economic outlook required caution.
A minimum investment of £1,000 is required.
Henderson Global Innovation
This £218.4m portfolio invests in companies that sell innovative products and services, with 62.7 per cent in the US and around 25 per cent in internet or computing stocks.
The fund’s biggest holding is its 8.2 per cent in Apple, and the second biggest holding is less than half this size.
Ian Warmerdam and Stuart O’Gorman also have 3 per cent in Google and a further 2.8 per cent in Chinese search engine Baidu.
Global funds often justify their extra expense with the increased research costs they have to incur, and the TER on this fund is 2.42 per cent.
Not only has the fund’s five year returns beaten its sector and index by a long way, but at 44.73 per cent they far outstrip the average returns of the IMA UK All Companies fund of 3.02 per cent.
Performance of fund versus sectors and benchmark over 5yrs
Source: FE Analytics
Aberdeen Global Chinese Equity
Investing in China has been getting a bad press recently, with the troubles of Anthony Bolton’s fund and warnings of a slowdown in the country depressing sentiment.
Aberdeen Global Chinese Equity has managed to provide gains of 49.54 per cent over the past five years, a period that includes the stock market crash of 2008, while its benchmark has climbed 30.02 per cent.
Performance of fund versus sector and benchmark over 5yrs
Source: FE Analytics
The managers say they are optimistic about growing domestic demand, leading them to be overweight the consumer discretionary sector.
They say that valuations are increasingly attractive in the country, although attention needs to be paid to ensure companies are fit to weather adverse conditions.
You’ll have to a TER of 1.96 per cent for this performance, while the Luxembourg-domiciled fund has a minimum investment of $1,500.
Scottish Widows American Select Growth
This fund sits in the top quartile of the IMA North America sector over five, three and one year periods.
Over the longer timeframe it has made 41.22 per cent, shrugging off losses in the calendar year of 2008 of 16.12 per cent.
It has made gains every year since then, and is up 9.82 per cent so far for 2012.
The fund has 21 per cent in information technology, while its largest holding is Harley-Davidson.
A hefty TER of 2.08 per cent is required to invest, and a minimum lump sum of £1,000.