Fund managers attacked for hiding charges from investors

New Star's former chief investment officer estimates that UK equity investors could be paying up to £5.8bn a year in charges that are not included in the Total Expense Ratio of a fund (TER). Despite its name, the TER does not include costs such as dealing commissions, taxes, and interest on borrowing.

Mr Miller called for the TER to be replaced with a calculation that includes all charges.

The TER of an average unit trust or open-ended investment company is around 1.6pc. Mr Miller's wealth management company, Spencer-Churchill Miller, said that can rise to as much as 2.8pc a year.