Investors are looking for
more value for their money when it comes to asset management,
indicates a study of trends in 2010 by Mercer. For its study, the
consultancy analysed fee data on more than 20,000 asset management
products from over 4,000 investment management firms.
Mercer found that in
particular, asset management fees for non-traditional asset classes
are under pressure. Fees for hedge funds, private equity,
infrastructure and real estate have all decreased.
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“The impact of the financial
crisis continues to be felt by companies and investors,” commented
Divyesh Hindocha, global director of consulting for Mercer’s
investment consulting business.
He continued: “Although not
universal, subdued investment returns have taken the edge off many
alternative asset products.
“Combined with an increased
focus on operational costs, this trend has put growing pressure on
asset managers to reduce the complexity of their products and lower
their fees in the pricey alternatives arena.”
The decline in
non-traditional asset class management may not be over. Hindocha
noted that Mercer believes there is scope for further larger
reductions in fees and for their further simplification.
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By GlobalDataIn the traditional asset
class sector, Mercer found that global emerging markets equity
remain the most expensive with median fees averaging around 1% of
assets managed.
This was up from 0.9% in 2008
when the consultancy undertook its previous global fee
assessment.
Mercer found that small cap
equity also continues to be an expensive category with fees
averaging around 0.89%. Global and regional equity strategies were
found to average 0.7%. The cheapest traditional active asset class
remained fixed income with average fees of about 0.35%.
When comparing the data for
pooled and segregated fees by regions, Mercer found that Canada is
the least costly, with average fees of around 0.3%. The UK and
Australia followed with average fees of 0.46% and 0.47%,
respectively.
Emerging markets remain the most expensive, at around
0.87%, with Asia-Pacific a close second at 0.83%. Japan, Europe and
US all range between 0.57% and 0.7%.
