The Israel Association of Mutual Funds is in advanced stages of launching an Internet Web site through which the public could buy and sell units in mutual funds at a discount price. "The mutual fund trading Web site will be an alternative platform for the public to directly trade units in mutual funds at significantly lower fees and is aimed at increasing competition in the sector," said Roy Vermus, head of the Association of Mutual Funds and CEO of Psagot Ofek Investment House. Fees could be lowered by at least 0.8 percent. The Web site initiative is a joint effort of the Association, the Israel Securities Authority and the Bank of Israel. Operations of the site will be run by one of the small- and medium-sized banks. "There is a tender, and Bank Mizrahi, Israel Discount Bank, Union Bank and the Bank of Jerusalem all said they would be prepared to operate the site," said Vermus. Average management fee at a mutual fund focused on shares is 2.4%, but many funds, mainly those of the top fund managers that boast juicy returns, charge as much as 3.5% or even 4%, which affects the client's return on investment. In the past, fund managers and brokers maintained that the main reasoning behind the hefty charges was to cover high costs. They have argued that although the Bachar reforms were a great success, they failed to take care of reforming the distribution channel of financial products, which were still 95%-channeled through the banks, which charge a so-called distribution fee that is paid by mutual fund managers. Distribution fees are one of the main costs paid by fund managers, which is the reason for higher fees their clients are being charged. The distribution fee is 0.8% a year in the case of stocks-oriented mutual funds, and 0.4% in the case of mixed funds. The initiative to set up a Web site through which the public could trade units in mutual funds, without paying any distribution fees, was first proposed by the ISA in 2005.