US giant helps investors by cutting out the middlemen

If the giant US investment manager Morgan Stanley Dean Witter (MSDW) has its way, private investors will be buying their unit and investment funds without the help of a middleman broker. The company has introduced the Morgan Stanley Dean Witter NoLoads Funds, which comprises a Global Equity Fund, a Continental Equity Fund and a UK Growth and Income Fund which carries no initial fees and an annual management fee of 1.6 per cent, slightly higher than the usual 1.5 per cent charged by British-based fund managers.

This fund is not directly marketed here, but Irish investors can access it, though minimum £5,000 investments are in sterling.

By cutting out intermediaries, the US company believes investors will save between 30 and 75 per cent of sales and management fees, which also include exit and switching fees, from years one to five.

Whether making such savings is a good idea in the long term will only be known as performance figures are recorded year-on-year. Low cost investment dealing comes at a price, which could be in the form of cut-price fund dealers and managers who may not be as experienced or successful as those who are paid high salaries and performance-related bonuses.

Nevertheless, the Morgan Stanley move which is an effort to gain a higher market share in Britain is part of a world-wide trend to bring down the costs associated with savings and investments. The most obvious reason for this change of heart is undoubtedly the Internet and the increasing number of low-cost dealing and investment facilities and back-up information that ordinary punters can now access.

Mass communications, it must be said, isn't much use if you don't know how to make an informed choice, something a good fee-based broker can always help you with, but it has transformed the way people are spending their money, and that isn't going to change.

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Family Money welcomes suggestions from readers on topics of personal finance they would like to see highlighted. Please write to Jill Kerby c/o The Irish Times, 11-15 D'Olier Street, Dublin 2 , or by fax no. 6798874, or email: jmkerby@indigo.ie