Many investors will be wholly unaware of how substantially costs affect returns. This only hit me when I read a piece by Vanguard of the USA. This firm, started by John Bogle, is surely the investor's guardian angel. They were leaders in the introduction of low cost index tracking vehicles.

What caught my attention was a note they wrote on 4 June 1999. Inter alia, they showed the effect of 2.5% pa total costs - the cost of a typical Mutual Fund. $10,000 invested for 40 years at a growth rate of 10% pa becomes $452,600 invested, imaginarily cost-free, in the Index. In the Fund; $180,000. 62% of the return is trousered by you know whom. Jaw dropping. I have in front of me an FT article suggesting that UK unit trusts probably cost, in total, 3%+ pa. There is, in fact, no regulatory statistic that captures the full cost of unit trust investment, i.e. Total Expense Ratio does not mean total expense ratio. No doubt vested interest saw to that. The trade association, of course, goes puce and gets into a data mining frenzy, when such maths receives publicity. Thanks to the likes of Mr Bogle and regulatory changes clearly the industry is now on the back foot. Correctly, in my view.

Added to which, study after study, whose conclusions I have read over the years, shows that long-term, only 20%-25% of active managers beat chimpanzees with darts. I mean benchmark 'index'. The 1 / 3 / 5 year league tables are probably worse than irrelevant. Such short periods prove nothing - except someone may have got lucky. They are hotbeds for the marketing departments to get stuck into your wallet. Another study showed that Pension Funds, who typically kick a 3 consecutive year lower quartile manager into touch, are more likely to be jumping from the frying pan into the fire. On average the higher rated replacement manager, judged over the previous three years, will have an off period, whilst the loser has a better period. Add in the costs of transferring mandates, more often than not the Pension Fund loses from making the switch.

I have dealt with Hedge Funds at length on more than one occasion. Suffice it to say I have never recommended investing in one.

David Fuller's view This is partly an issue of 'horses for courses' but I too have expressed concern over fund management fees, without going into the detail that Peter Bennett provides.

Subscribers have experienced an often difficult environment in equities since 1999 and high management fees for funds have not helped. So how should we invest over the medium to longer term?

I will start by trying to identify where we are in the long-term stock market cycle. To do this I will look at three historic charts for the US equities - S&P 500, DJIA and Transports because this is still the biggest and therefore most influential market.

These broad ranges are not extended top formations, in my opinion, as many have feared. Instead, there are good reasons for believing that they now reveal the latter stages of a secular valuation contraction cycle, not previously seen since the late 1960s to early 1980s period.

If so, my guess is that we are approximately near the 1979 to 1980 phase of the previous valuation contraction cycle. If so, we may see some extensive ranging in the next few years, which would lower valuations once again, mostly due to continued corporate profit growth. If correct, this ranging would occur near current levels, with little chance of another plunge such as we last saw in 2008.

How should we play the environment that I have just described? I favour a portfolio of global Autonomies, which I know at least some of you already hold. If you agree and are moving in this direction, a strategy for the next few years would be cost averaging, effectively buying your Autonomy candidates on setbacks.

Provided one has invested in sector leaders which have a history of increasing dividends, I would only sell or lighten positions if those shares saw dramatic overextensions relative to their MAs, within previously consistent uptrends. Apple is a good example and the share looks a lot more interesting today, although I think it will take a long time for it to retest its high.

(See also, Eoin's SAP as Most Valuable German Company Validates Deals Spree - Eoin's S&P Pan Asia Dividend Aristocrats - Eoin's S&P Europe 350 Dividend Aristocrats -- Welcome to the Robot Revolution, but Beware - Eoin's S&P 500 Dividend Aristocrats - Welcoming, and Worrying About, a Record Market - Buffett Still Buying Stocks, Sees 'Good Value', and Eoin's Consumer companies.)