Will Vanguard be able to turn the screw?

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.

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.

Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.