imageThere have been substantial reductions in external manager fees for asset classes including global equities, emerging market equities and hedge funds, according to new research from bfinance.

Fee compression has been driven by factors including the rise of cheaper competitors, increasing transparency on costs, and expansion of the manager universe, said the research paper. Figures were based on real fees being quoted by asset managers for real mandates, and not surveys or “rack rates”, which bfinance said tend to be inflated.

According to the consultancy, for active global equity mandates fees have fallen by 7% since 2013 and 4% since 2016. Median quoted fees for a US$100m (€90m) mandate currently sit at 55 basis points (bps), with reductions particularly notable for the lower quartile, where fees have fallen from 51bps in 2013 to 46bps in 2016 and 42bps in 2019.

Larger fee reductions are seen in global emerging market equities, with fees down 13% since 2013 and 6% since 2016. The median quoted fee for a US$100m mandate is now around 74bps, with considerable scope for downward negotiation, according to bfinance.

  IPE / bfinance