In a year during which a number of fund managers made a splash about cutting fees, Mike Taylor writes that the latest Money Management Fund Manager Fee Comparator based on FE Analytics has confirmed that high fees paid to fund managers will not necessarily buy significant outperformance.
The superannuation industry has been applying downward pressure on fund manager fees for most of the past decade, but the trend has been less evident in the retail/advised space – something which underscores the distinct differences between fees charged on virtually identical products between wholesale and retail clients.
However, at a time when investment choices and value for money are being placed under the spotlight in the context of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services, some increasingly hard questions are being asked.
The bottom line is that Money Management’s 2018 Fee Comparator exercise has confirmed that a number of fund managers need to reflect upon the value they are delivering to investors for the fees that they charge. In at least one instance, a manager said its fund’s relative performance would be prompting it to undertake a review.
There are, of course, justifications for some managers charging higher fees than others. Australian Ethical, for example, can legitimately point to the cost of running ethical screens across its investments. Money Management’s past...