Excellent comments on the inefficiency of the mutual fund industry in the UK. It reminds me of the situation that has existed in Information Technology, where the suppliers and professionals involved have a self-interest to maintain the complexity in order to bump up income and maintain their self-importance.
Examples of unnecessary complication abound – equalisation, group units, lack of a single pricing system, lack of an agreed method to handle nominee accounts and so on.
Who would see it in their interests to simplify mutual funds? Not the distributors – they complained too much when asked for a share of EMX costs. Not the fund managers, they would far rather keep the status quo than face consolidation into a much smaller number of players with lower costs.
Managers are prepared to poor millions into boosting distribution but pall at the thought of spending a fraction on improving efficiency. Perhaps a new entrant can come along and leapfrog the competition by offering an STP only solution. Maybe the Crest/Euroclear link-up will come up with a solution. Otherwise mutual funds may find themselves overtaken by ETFs.