There is little or no correlation between fund manager performance and the size of their post-negotiated management fees, according to research.
These findings contradict the notion that managers with stronger performance command higher fees.
“Asset managers should not assume that stronger performance will automatically lead to higher fees or that performance outside of the top decile requires a fee discount,” InvestorForce, which is part of index provider MSCI and carried out the research, says.
“Conversely, institutional investors should not assume that they will have to pay a premium price for products with superior performance.”
Post-negotiated fees differ from published fees and, MSCI says, can differ by 50 basis points or more.
Negotiating fees has historically been held back by the fact that there is little or no actual post-negotiated fee reference data to drive more efficient outcomes.
In addition, the research says there are significant differences in actual post-negotiated management fees, even within the same market segment.
Although individual manager fees are not disclosed, InvestorForce says its manager fee tracker users can calculate fee universes and distribution metrics for more fee transparency.
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