The Leicestershire-headquartered firm said clients are "suffering severely" as a result of weaker returns.

UK-based fund managers could be overcharging clients by an estimated £6.7 billion ($8.2 billion) for actively managed funds that fail to outperform benchmark indices, according to a new report by Salisbury House Wealth.

Of the £942 billion invested in actively managed UK funds, 74.7 per cent underperform their respective benchmark indices, according to the report's findings.

The wealth manager explained that an actively managed portfolio costs investors around 1.48 per cent in fees as a percentage of the fund's value. Theoretically, this upfront cost should be absorbed by the higher returns the portfolio generates as a result of fund managers' tailored investment decisions.

In comparison, a fund that is passively managed – or one which simply replicates index benchmarks – costs investors around 0.5 per cent.

The report adds to the long-standing debate over whether actively-managed funds are, in a market where it is typically difficult for more than a few funds to consistently beat an index and deliver persistent "Alpha", worth the fee, particularly in asset classes that are relatively efficient.

Salisbury House Wealth said that clients paying for actively managed funds that under-deliver are “suffering severely” as a result of weaker returns that, instead of absorbing, compound the additional fees charged for a supposed superior service. 

In reality, clients pay a total of £10.2 billion in fees for actively managed funds that nonetheless underperform benchmark indices, according to the report, which further suggests that “far too much” of this figure is going to fund managers who “chronically underperform”.

“When it comes to savings, ambivalence can cause serious harm – and the figures are testament to this,” said Tim Holmes, managing director of Salisbury House Wealth, adding: “It is dangerously easy to invest money and to then forget about it for several years. But unfortunately this is exactly the kind of situation that leaves people vulnerable to being overcharged by their fund managers – and ultimately to the potential for considerable financial loss.”