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Investment Management Fees: New Savings, New Challenges
New bfinance data reveals falling fees in several sectors, especially where providers have been under pressure from cheaper competitors or the investment landscape has evolved.
IN THIS PAPER
Global equity. Active global equity management fees fall by 8%, low volatility by 25% and smart beta by 24%.
Unconstrained fixed income. New popularity breeds premium pricing confusion, with managers using very different pricing logic behind the scenes. Fees are highly dispersed around a 48bps median.
Hedge funds. Fund of hedge funds cut base fees by 20% globally and nearly 30% in Europe. Meanwhile, alternative beta fees appear to have fallen with new providers offering large early bird discounts (up to 50%).
Private markets. After years of easy fundraising, are fees finally falling? Most established sectors remain intransigent, with investors at a power disadvantage due to high demand. Yet certain areas have provided substantial price compression, such as European private debt (down >30%).
Investors’ costs have never been more vigilantly scrutinised than they are today.
Every few weeks another large institution hits the headlines over asset management fees, either announcing cost-conscious changes or defending their spending. Fee benchmarking, analysis and negotiation increasingly in demand.
New bfinance data reveals falling fees in several sectors, especially where providers have been under pressure from cheaper competitors or the investment landscape has evolved. Meanwhile, many asset managers have seized the opportunity to launch fashionable products at a premium to their conventional equivalents, with certain breeds of unconstrained, multi-asset or advisory mandates sitting at the top of that list.
This paper also includes insights from senior investors around the world, including the BT Pension Scheme, which has reduced fees by around 25% while remaining committed to active management and alternative investments.
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This commentary is for institutional investors classified as Professional Clients as per FCA handbook rules COBS 3.5R. It does not constitute investment research, a financial promotion or a recommendation of any instrument, strategy or provider. The accuracy of information obtained from third parties has not been independently verified. Opinions not guarantees: the findings and opinions expressed herein are the intellectual property of bfinance and are subject to change; they are not intended to convey any guarantees as to the future performance of the investment products, asset classes, or capital markets discussed. The value of investments can go down as well as up.
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