Fee based competition still low

A dearth in the willingness of fund managers to engage in fee based competition has placed a dampener on efforts to reduce investment fees over the last six months, according to the latest InTech survey of investment fees.

The InTech survey, which covers the pooled and individually managed products of 70 different asset managers, found that most managers actually kept their fee levels relatively steady over the six months to the end of August 2001.

The survey found that approximately 80 per cent of growth, Australian shares, international shares, Australian bonds and international bonds managers kept their fees stable over the six month period, while the fees of up to 95 per cent of conservative growth managers also remained steady.

“Over the short term, the majority of asset managers held fees relatively stable,” InTech says.

But InTech also found that fee based competition between asset managers for investment dollars, already considered low, actually decreased in the six month to August.

According to InTech, the level of competition amongst Australian cash managers almost halved in the six months to the 31 of August, while the level of competition mongst Australian bond managers was also found to be low, casting a cloud over the future level of fees to be charged by managers in these sectors.

“The Australian bond and cash asset sectors are not as fee competitive as other sectors, indicating that considerable savings may be made on fees charged by different managers in these two asset sectors,” InTech says.

The survey found that fee competition remains strongest in the growth manager universe, despite declining somewhat over the last six months. Conservative growth, Australian shares, international shares and listed property trust managers also continued to operate in a relative competitive fee environment, according to InTech.