The new research by Zenith reviewed 88 rated funds and compared the performance of a low-cost group with management fees of below 0.58 per cent per annum with a higher cost group with fees above this amount.

The research found there had been a significant increase over the last few years in the number of low-cost multi-asset funds due to sensitivity regarding management fees in a low yield environment.

The research found the groups achieved returns of 8.5 per cent and 8.4 per cent, respectively, but there was a more pronounced difference in risk.

The low-cost group suffered a worst loss of 6.4 per cent compared with 5.1 per cent for high cost funds.

Zenith attributed the drawdown to comparative allocations to alternatives between the two groups, with the low-cost group maintaining an average 0.8 per cent allocation to alternatives versus 6.8 per cent in the high-cost group.

Zenith head of multi asset Andrew Yap said the research showed that investors should not choose a product based solely on its cost.

“While investor interest in low-cost funds is likely to remain elevated in a low rate environment, we caution against selecting products based solely on cost considerations,” he said.

Mr Yap said that there were differences in the ways that these funds were managed and it made sense for investors to be aware of those.

“Investors need to be aware that these fundamental differences can impact relative performance between the groups and affect risk and return outcomes, despite low- and high-cost multi-asset funds having a similar label presented to investors,” he said.

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