Fund charges by country revealed

Italy and Spain are the worst places for fund charges in Europe, research from Morningstar shows. Investors in Italy and Spain are paying the highest fees on average compared to other European domiciles – and contrary to the trend elsewhere, charges are increasing. The average asset-weighted ongoing charge in Europe has fallen to 1% this year, from 1.09% in 2013. On average, Italian investors pay 1.42% and Spanish investors pay 1.21%. Italy and Spain are not alone in having higher average expenses and rising charges; fund expenses are also on average higher in Belgium, while on-going charges have also increased in Denmark and Germany. Investors in Denmark pay higher fees to larger fund companies, suggesting that Danish investors are better off choosing funds from fund companies with fewer assets, says Morningstar. Asset-weighted ongoing charges in the predominantly institutional and high-net-worth domiciles of Ireland and Switzerland are “well below” the European average, Morningstar’s research shows. The charge is the same in both countries: 0.62%. The decline in ongoing charges is, among other factors, a result of the “increasing penetration of clean share classes (those without commission fees)”, says the Morningstar report, but also a result of investors' general increased preference for less expensive funds. However, although the overall ongoing percentage charge has decreased, investors pay more in nominal values now than in 2013. The annual payment of investors in European funds exceeds €61 billion in ongoing charges, up from €53 billion in 2013. The reason is that the increase in managed assets more than offsets the drop in ongoing charges, said Morningstar. “There is clearly some good news for investors here that fund fees – in many cases – are coming down in Europe”, Nikolaj Holdt Mikkelsen, chief analyst for Morningstar Denmark, said. “However, investors really do have to do their homework and take care to shop for a good deal. The new commission-free share classes have brought average fund costs down in some markets, but investors elsewhere are on average paying more now in asset-weighted expenses than just three years ago when Morningstar conducted a similar Europe-wide study.” The 2016 study also shows that expensive funds have a tendency to remain expensive and “cheaper funds will continue to be attractive in the future”, suggesting that past ongoing charge levels are a “strong predictor of future levels”.  The Morningstar paper is called ‘European Fund Expenses are Decreasing in Percentage’. ©2016 funds europe

Sponsored Profiles

SPONSORED FEATURE: Alternative thinking

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

SPONSORED FEATURE: Interest rate risk hedging: Swapping to other options

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

SPONSORED FEATURE: Why blockchain could be the fund industry’s next Ford Model T

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

SPONSORED FEATURE: Open architecture: In need of protection

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

CEO INTERVIEW: Munro gains three-year track record

Mar 16, 2017

Aviva Investors’ annual results this month were the third set since Euan Munro took over as CEO. Nick Fitzpatrick speaks to him about the ‘Aims’ fund at the heart of the firm’s outcome strategy.

DISTRIBUTION INTERVIEW: Tales of the unexpected

Mar 16, 2017

Laurence Terryn, a fund selector at Candriam, tells David Stevenson how the twists and turns of the past year’s macro environment flavoured her approach to fund selection.



Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.