My friend Douglas in London tells me that fund groups in his country are announcing increases in charges this year and he is horrified by the thought especially since I pay a much lower fee in the U.S. We're talking about investors like me who want to deal direct.

The fact is that across the pond any investor looking to plunk money into a collective investment fund, such as, say, a unit trust, will come up against a rather big initial fee plus annual charges that are in the stratosphere. Take this comparison. In London, an equity fund will carry an initial charge of some five percent. In the U.S., it's as little as zero because some one-sixth of mutual funds are no-load funds. In London, there will be an annual charge plus expenses of 1.63 percent. Compares this with a total expense ratio of 1.4 percent for the average U.S. fund and only 1.04 percent for a U.S. no-load fund.

Translated, this means my friend Douglas, by investing $20,000 into a UK fund, will probably have some $2,700 incurred in charges over five years. For me, I would only be down about $1,000.

Lipper Fitzrovia compared annual charges of 11 U.S. fund groups that operate on both sides and found that the average total expense ratio for equity funds in the U.S. was 1.24 percent while in the UK it registered 1.73 percent. Why the difference? In the U.S., commission is not automatically built in so the total charges levied can be much lower. Not the case in London where some three percent of the typical five percent charge is earmarked for intermediaries that sell the products.

Even if you invest directly, with no intermediary such as an advisor, you still have to pay the full five percent charge plus the 1.5 percent annual charge in London. And that includes no advice whatsoever. We have it better here with access to literally thousands of funds with no initial charge and low annual charges.

Douglas wants to know why things don't change in the UK. Fairly simply to decipher. We have a greater choice here and investors who choose to buy their funds direct get a much better deal. After all, a typical U.S. mutual fund is worth some $1 billion, says Morningstar, while in the UK its value is around $200 million. That's quite a difference.

Finally, to Douglas's dismay, there is no incentive for his funds to change the current charge structure. Why should they? The funds rely more on intermediaries to act as distribution channels for their products than they do here.Want to move, Doug?

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