Will UK retail investors be able to spot a bargain when they see one? In the US, Vanguard has made a business model out of keeping costs low and charging investors less. Now it has brought this model across the Atlantic, launching a range of index tracking funds with fees or total expense ratios that significantly undercut equivalent products currently available.
This is to say, these are passive products that are a lot cheaper than other passive products. If the products do what they claim to, the only difference between them should be the price, so a rational consumer would always choose the lowest price option.
But can we rely on rational consumers?
Recent research by fund ratings agency Morningstar into global fund markets found just one place where investors pay attention to the cost of investment products: Taiwan.