Could Google spell the end of the line for the funds gravy train?

"Don't buy the fund, buy the fund house" is a popular market adage, reflecting the belief that investment managers often do far better out of blockbuster funds than the investors in the fund do. And certainly, recent trends in the industry offer plenty of reason for that kind of cynicism.

Asset managers enjoyed a second successive year of record profits in 2014, says Chris Flood in the FT, buoyed by the largest inflows since the global financial crisis. Overall, the industry's profits rose by 10% to more than €54bn worldwide, according to figures from consultants McKinsey.

Still, it's not all good news for managers. Costs are also shooting up, according to McKinsey: since 2007, they have risen by 44%. Staff costs alone firms' biggest expense rose by 9% last year in the US and 8% in Europe, while sales and marketing and IT costs also spiralled. Increased regulation is a major burden, while the cost of distributing funds is increasing amid a race to build market share. "The sun is still shining on asset management, but the clouds are growing darker and moving nearer," Philipp Koch of McKinsey told the FT.

The fact that the industry has failed to keep a grip on overheads isn't surprising. Investors in funds are all too familiar with seeing their profits eroded by excessive costs many of which aren't fully reflected in headline fees. In one notable example of wastefulness, the Financial Conduct Authority is now trying to force firms to pay directly for the vast amount of research they get sent by brokers (and largely ignore).

Currently, research is typically paid for through inflated brokerage commissions on the funds' trades, meaning that clients are footing the bill for what should really be one of the manager's own expenses.

"It's a curious arrangement; rather as if you hired a builder to construct a wall and he then charged you not only forthe work and the materials but for the trowel and cement mixer too," says Jonathan Ford in the FT.Yet it all adds to the impression that fund management is a profligate industry ripe for disruption perhaps from one of the tech giants, who are now eyeing financial services.

Several have launched or trialled payments services, including Apple and Facebook. Amazon plans to offer working capital loans to businesses in eight countries, including the UK (it already offers them in the US and Japan). Significantly, Google is known to be researching the funds industry. The entry of Google or a peer could knock the asset management gravy train off the rails.