Investment management fees have rightly come under intense scrutiny in recent years. High fees can dramatically reduce long-term investor returns. Yet it is important to remember that fees are not the main reason that the average returns achieved by investors are so much lower than market returns. Nor is it poor performance by managers.

The biggest problem is not the behaviour of managers it is the behaviour of investors. They tend to buy high and sell low. They buy when a manager has performed well, sell when she has done badly and can’t resist tinkering with their portfolios. Above all, they panic.