Expensive funds vs ETFs — is the cost worth it?
Broad index ETFs are almost always cheaper and more efficient than actively managed funds for most investors. Active funds often charge 0.5–1.5% while equivalent ETFs cost 0.03–0.20%.
The evidence
The SPIVA report consistently shows that 75–90% of active UK equity funds underperform their benchmark index over 10 years, after fees. The longer the period, the worse the active performance picture becomes. This is true of professional fund managers with full research teams — the odds for individual investors picking their own stocks are even lower.
When active funds might make sense
In less efficient markets (emerging markets, small caps, specialist areas), active management has a better track record. But for broad UK or global equity exposure, the evidence is overwhelmingly in favour of low-cost passive funds.
Platform charges matter too: many UK platforms cap the fee on ETFs but not on equivalent funds — the UK Broker Fee Index 2026 shows where that gap is largest.
Key takeaway: The evidence on active fund underperformance relative to index funds is overwhelming at the 10-year horizon.
Arken shows you the cost difference for every holding and highlights lower-cost alternatives where they exist.
