The European fund industry is lowering costs even when imposing performance fees, research has found.
London-based fund research company, Fitz Partners, analysed “twin” share classes within the same products. These share classes are identical in every aspect but their levels of management fee and performance fees.
The research found that management fees differed by 26 basis points on average, representing a 24% drop in the average management fee of the share class also charging a performance fee.
The asset management industry has come in for criticism for confusing and expensive fees.
In a sample of 43 products, overall ongoing charges (OCF) including performance fees for those share classes that charge performance fees were cheaper by 19 basis points.
Hugues Gillibert, chief executive of Fitz Partners, said: “It is interesting to note that, when you have the choice between “twin” share classes, you might actually get a discount when choosing to invest into the share class carrying a performance fee.”
He added: “We were glad to see a significant reduction in management fees to compensate for the presence of a performance fee, but we did not expect this discount to remain after adding the cost of the performance fee to the funds OCFs.”
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