Oh, here we go again. Yet another investment consultant trots out that same tired old analogy between investment providers and supermarkets. Here’s what Graham Bentley has to say regarding the, increasingly desperate, attempts of fund managers to obscure their charges.

“Most companies do not declare what it costs them to administer their business. Tesco doesn’t tell you how much it spends on every bit of the business. I’m not sure what marginal benefit there is for customers to make their decisions on a fifteenth of a basis point on varied underlying costs.”

Graham – please do stop with this ridiculous Tesco comparison. It is (and always has been) a complete red herring.

Tesco don’t need to give you a breakdown of costs because the products themselves exhibit complete cost transparency. When I buy a tin of beans, I know what I will be paying and I know, with a pretty high degree of certainty, what I will be acquiring for my money.

.With a fund, however, the picture is very different because what I receive (i.e. the gain on my investment) is not known to me when I make the purchase and, because that return is directly affected by the charges levied, I do need to know exactly who is taking what away from my fund.

If you want to use a supermarket analogy, try this one on for size.

Tesco sell you a tin with ‘some beans’ inside. You don’t know how full the tin is until you have paid for it and got it home. The amount of beans in any particular tin will depend upon the costs Tesco incurred getting that individual tin to the shelf.

In that situation, I suspect consumers would be much more interested in a breakdown of Tesco’s costs