Annual management fees increase

Calculating_feesMore equity funds than bond funds have raised their fees in the past ten years, and the increases have been higher too, according to Lipper.

In a recent report that focused on funds that have changed their fees in the past ten years, the data provider explores the extent to which mutual funds in the UK and Europe have changed their annual management charges.

Of the actively managed equity funds sold cross-border that changed their annual management fees, 80% increased them. For bond funds, the number is 60%.

On average, fees for actively managed equity funds rose by 28 basis points and for bond funds by 17 basis points.

Funds domiciled in the cross-border centres of Luxembourg and Ireland that changed their fees, 70% increased them, while the number for those in the UK is 80%.

Lipper says the drivers for increased fees are the rising cost of distribution in continental Europe, the growing power of platforms in the UK, more specialised funds laying claim to higher fees, the cost burden of regulation, and the desire to increase revenues.

The industry average has risen because of the dual process of new funds setting their fees at or above the current average, the report continues, together with existing funds that change their fees pushing them up.

“Previous research has shown that for actively managed funds in the UK and those sold cross-border around Europe annual management fees have been on the rise for retail investors over the past ten to 15 years,” the report says.

©2011 funds europe