The global financial crisis (GFC) has served to make investors cost-conscious which, in turn, has acted to drive down asset management fees for most non-traditional asset classes, according to new research released by Mercer.
The Mercer research, released this week, has found that fees for hedge funds, private equity, infrastructure and real estate have all decreased while those for traditional asset classes have suffered more variable fortunes with some, such as those for long-only equities and fixed income, actually increasing.
The Mercer research — 2010 Asset Manager Fee Survey — covers 20,000 asset management products from over 4,000 investment management firms and has prompted Mercer’s global director of consulting, Divyesh Hindocha, to suggest that the impact of the GFC is continuing to be felt by both companies and investors.
“Although not universal, subdued investment returns have taken the edge off many alternative asset products,” he said. “Combined with an increased focus on operational costs, this trend has put growing pressure on asset managers to reduce the complexity of their products and lower their fees in the already pricey alternatives arena.”
Hindocha said Mercer believed there was room for further simplification and large reductions in overall fees charged by asset managers.
Looking at the Australian experience, Mercer Asia Pacific head of manager research Marianne Feeley confirmed the downward pressure on fees in alternative asset classes saying this was even the case in some newer alternative areas such as infrastructure debt.
However, she said that where traditional asset classes were concerned such as Australian fixed income, there had been large increases in fees albeit it off a low base.
