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Higher fees, same alpha
MIke Taylor
The imposition of fees is driving the cost of investing is up, according to ratings house Morningstar.
In its latest assessment of small cap Australian share funds, Morningstar has noted that management fees have been on the rise, with retail fees rising to 2 per cent, while wholesale fees rose to 1.21 per cent.
“As all managers in this space (small cap Australian shares) have limited capacity, many have restricted the amount of institutional mandates given the more attractive margins in retail – hence the hike in fees virtually across the board,” the Morningstar assessment said.
It said many managers had used the ‘limited capacity’ argument to increase fees and while this had some credence, the reality was that industry investors were now paying more for the same amount of alpha.
15 July 2008
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