Are fees too high?
The majority of Australian active managers might be charging fees that are too high and smart beta investments strategies will continue to disrupt the active management, according to VanEck’s analysis.
The report, entitled “When are fees too high? The potential impact of smart beta to disrupt active Australian equity strategies”, claimed that most Australian equity funds should be charging between 0.35 per cent and 0.65 per cent per annum, as most of their performance could be explained by factors which were also used in smart beta strategies.
“Only those active managers who can demonstrate identifiable and persistent ‘real alpha’ will prevail,” Russel Chesler, VanEck’s director – investments, said.
“Australian equity managers that continue to offer benchmark-like performance for high fees face some hard decisions. They must evolve to survive.”
According to Chesler, active managers needed to better differentiate themselves and provide what smart beta could not.
“Of this differentiation can’t be achieved, the investors will continue to question the fees they are being charged,” he concluded.
AUTHOR
Oksana Patron
Recommended for you
Two former senior Global X employees have launched their own ETF provider, ETF Shares, focused on offering index ETFs for advisers and retail investors.
With GCQ Funds Management and Lakehouse Capital making their recent ETF debuts, the two fund managers unpack why financial advisers are essential to their respective launches.
ETF provider Global X is set to launch its latest ETF, focused on artificial intelligence infrastructure.
Index provider MSCI has unveiled two measures to make it easier for financial advisers and wealth managers to access transparent insights into private assets.
