A new type of tax-efficient fund structure is gaining in popularity among fund managers as a way to win share in the UK’s fast-growing defined contributions pensions market. However, the popularity of the funds is not really down to their tax-saving potential.

US passive manager Vanguard - which is the largest DC asset manager in the US - launched its second such fund for UK investors last week, part of its ongoing efforts to tap into the £275 billion UK DC market, which some predict will swell to over £700 billion within a decade.