This makes the issue extremely pertinent when putting together an ISA they intend to hold for the long-term.
This week, FE Trustnet looked at expensive passive funds, which can charge investors up to 1.5 per cent for merely tracking an index.
Here are five active options in popular areas that charge the same – or less – than the most expensive passives.
RLAM UK Equity Income – 1.3 per cent OCF
Martin Cholwill’s £379m portfolio is not only one of the cheapest in the sector – it charges only 1.3 per cent per annum – but is also one of the best performers since he took over in March 2005.
The fund has made 93.63 per cent in that time while the average retail UK Equity Income fund has made 64.14 per cent, according to data from FE Analytics.
Performance of fund vs sector since March 2005
Source: FE Analytics
Much of that outperformance has come in the last three years, over which time it is up 48.79 per cent compared with returns of 33.62 per cent from its peers.
The consistency of its outperformance was highlighted in a recent FE Trustnet article.
The fund has beaten its peers in rising and falling markets, which may appeal to investors unsure of what is in store on a macro level over the next few years.
Its yield of 3.82 per cent is around the sector average. The manager invests heavily in a number of FTSE 250 companies, as well as the blue chip favourites of the sector.
It requires a minimum initial investment of £1,000.
Henderson Asian Dividend Income – 1.55 per cent OCF
This is another fund that regularly appears in the top quartile of its sector for performance and the lowest quartile for expense.
An ongoing charges figure (OCF) of 1.55 per cent is the seventh-lowest in IMA Asia Pacific ex Japan, where costs are often higher than in UK-focused portfolios.
Its yield of 5.4 per cent is bettered by only one of its peers.
It has made 35.54 per cent over three years while the average fund has returned just 25.62 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Manager Michael Kerley took over in November 2011.
The fund has yet to attract the inflows of the more famous funds in the sector, currently amounting to only £102m.
However, with a number of its competitors now soft-closed, this fund is an interesting alternative.
It requires a minimum initial investment of £1,000.
Standard Life Global Equity Income – 1.08 per cent OCF
Another option for income-seekers is this £97.3m portfolio, which has an OCF of just 1.08 per cent.
It has diversified exposure to developed markets, with 40.1 per cent in the US, 22.3 per cent in Europe and 19.3 per cent in the UK.
The yield is just 2.83 per cent, which is low for the sector, while performance has been more or less in line with its peers over the medium-term.
However, it has done better in the recent past. Kevin Troup took over in January of last year, and the fund has significantly beaten its sector since then.
Performance of fund vs benchmark since 1 January 2012
Source: FE Analytics
Data from Style Research shows the fund is now more concentrated than it has been for three years, and is looking for companies with a high yield and returns on equity.
It requires a minimum initial investment of £500.
Troy Spectrum – 1.5 per cent OCF
Funds of funds often charge considerable fees, with investors having to pay for two layers of management.
However, this fund is available with an OCF of just 1.5 per cent for anyone investing directly, and the charge stays the same for certain platforms.
The £80m fund is run by a team including FE Alpha Manager Francis Brooke and Sebastian Lyon, known for their cautious approach to investing.
Its largest position is CF Ruffer European, which is from another house known for its cautious approach. Another 7.2 per cent is invested in gold bullion.
There is plenty of diversification, with cautious funds such as Jupiter Absolute Return sitting alongside growth-orientated ones such as BlackRock Gold & General and First State Asia Pacific Leaders.
The volatility of the fund is one of the lowest in the IMA Flexible Investment sector, and the Sharpe ratio – which measures risk-adjusted returns – among the highest.
The fund is more likely to appeal to those concerned with capital preservation, as it has performed only slightly above the sector average over three years.
Over five years its returns of 51.91 per cent are exceptional, however, helped by its robust performance in 2008.
It requires a minimum initial investment of £1,000.
Royal London Far East – OCF 1.06%
For investors who want growth from Asian equities rather than income, this is an exceptionally cheap option.
Edward Chan runs the £512m portfolio, the ongoing charges of which are just 1.06 per cent.
Performance has been in line with the sector average over three and five years. It has made 65.43 per cent over the longer period while the average fund in the sector has made 66.74 per cent.
A quarter of the fund is invested in Australia, and it is also overweight financials and telecoms.
Royal London Far East is underweight the more cyclical consumer services and basic materials sectors.
It requires a minimum initial investment of £1,000.