The UK investment industry has hit back against claims of high hidden fees charged by fund managers, equating their existence with that of the mythical Loch Ness monster.

The Investment Association (IA) said that, while it took allegations of hidden fees seriously, those claiming the use of such fees had yet to prove their existence conclusively.

It noted that research, conducted by Fitz Partners, found that the average turnover rate of equity funds examined was 40%, which it claimed cast doubt on “hidden-fees hysteria”.

Based on the 40% turnover rate, the research estimated transaction costs across the funds stood at 0.17%, with ongoing charge costs of 1.42% across the examined universe.

“Contrary to this expectation,” the paper adds, “funds actually covered both ongoing charges and explicit transaction costs and delivered returns higher than that of the benchmark.”

The paper examines costs of 1,350 equity funds over a three-year period, starting in June 2012, covering UK and global equity funds but also those in the IA’s Asian and North American sectors.

It finds that, across the universe of UK All Company funds, costs stand at 30 basis points.

“Explicit transaction costs,” it adds, “are by far the largest component of total investment costs, and of that, approximately two-thirds are tax and one-third commission.”

Jonathan Lipkin, director of public policy at the IA, insisted the industry should be judged on actual performance rather than “perceptions of delivery”.

“Our research with Fitz Partners is a detailed empirical analysis of equity fund performance in the context of quantified charges and costs,” he said.

The IA’s condemnation of supposed hysteria surrounding management fees comes amid a push by the UK pensions industry for greater transparency on management fees.

The association has already responded by promising to launch a new disclosure framework, with the board advising on its creation to be chaired by Mark Fawcett of the National Employment Savings Trust.

The new code is likely to draw on the work undertaken by UK local authority funds, with a standalone consultation on its own voluntary code for fees to be launched in the coming weeks.

The initiatives come amid a push for the UK to adopt a disclosure code based on the mandatory framework agreed for Dutch pension funds