Asset managers are to pay out £34m in compensation to investors after a probe by the UK regulator uncovered widespread evidence of funds charging expensive management fees for doing little more than tracking their benchmark.

The fund houses, which have not been named, have made the move to reimburse investors in the wake of a landmark investigation by the Financial Conduct Authority last year into the UK’s £7tn asset management sector. That investigation found that £109bn of investor money was sitting in so-called closet tracker funds.