Over £5bn is sitting in old equity index fund share classes charging over 0.5% in fees, analysis by Vanguard Asset Management has highlighted.

This is despite the average UK domiciled index fund charge sitting much lower at 0.18%.

Vanguard suggested that improvements in competition and transparency have forced fees down on newer share classes but has urged investors to check if they’re in old fund share classes to potentially save on higher fees.

While investors typically now access funds through fund platforms, meaning the need for so many different share classes has reduced, Vanguard found that some older share classes are still charging as high as 1.5%.

“Nobody would pay five times the price for the same car,” head of retirement and investments at Vanguard Europe, James Norton, commented.

“Yet, when it comes to funds, that’s exactly what a lot of people are doing. Remember, the higher the fees you pay the less returns you get to keep for yourself.

“Some managers may need your permission to move you to a lower cost share class, so it is best to keep on top of any communication you receive. It is even better though, to check and make any changes yourself and make sure you’re getting the best deal possible.”

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