A recent report from fund manager, Mercer, has found that many of Australia’s biggest fund managers are continuing to charge extremely high fees for managing portfolios that are almost identical to the index they are trying to beat.

This practice known as “hugging the benchmark”, raises the question as to whether the fees many Australians are paying their fund manager justifies the return they are getting. ¬†According to the May 2014 Mercer Investment funds performance survey, the median Australian shares manager beat the S&P/ASX 300 index by 1.5% before fees and tax over 12 months; however, over five years, the median manager only beat the index by 0.90% p.a.

These returns illustrate the point that in many instances the fees Australians are paying their fund managers […]