It's slightly ironic that the total expense ratio (TER) was the 'whipping boy' 15 years ago for going too far and now it's the whipping boy for not going far enough.

I don't know if this is a case of apples and pears, with the TER being criticised for not doing something it does not claim to do. (Or for an apple not being a pear). The TER presents all annual operating expenses borne by the fund over one year - and remains robust as a measure on this basis.

Lipper Fitzrovia remains very supportive of efforts to come up with a means to disclose trading-related costs on a consistent basis across Europe and across asset classes. My understanding is that a means to achieve all three elements has not yet been developed.

I have seen the coverage of Alan Miller's comments but some details of exactly what he's proposing would be helpful.  Hopefully Miller's new firm has been contributing to the Committee of European Securities Regulators' (CESR) recent consultation process in revising the 'simplified prospectus' into the new key information document with their suggestions on their cost measure.

This week's stories refer to estimates of £5.9 billion of 'hidden' fees the industry charges. I can't help feeling that some of this may relate to combining one-off charges (borne by the investor) and annual charges (borne by the fund). This is something the UK's RIY (reduction in yield) measure tries to do although it has not been deemed a resounding success. Combining annual and initial charges in a single figure is problematic, and is perhaps more of an acamedic argument, although it may well be something an adviser would wish to show their clients, together with any charges they levy, to illustrate the impact of charges over a time period.

CESR is addressing the issue of any misconceptions in terminology for the 'total' in TER, with a proposal to drop the term TER, although keeping the resulting measure, ie, operating expenses borne by the fund. In addition, initial/exit fees (borne directly by the investor) and performance-related fees will be shown separately in the KID. I think this approach is reasonable.

We have previously highlighted the issue of portfolio turnover and the costs related to this, and we welcomed the inclusion of portfolio turnover in the simplified prospectus as a proxy for trading-related costs. 

I'm not sure if SCMP would go so far as to ask for a Sir Thomas Legg in the funds industry - retrospectively reclaiming expenses from previous years! 

Ed Moisson is director of European Fiduciary Operations at Lipper Fitrovia