Fees in Focus: Three Key Report Takeaways for Asset Managers

25 April 2022

Earlier this month, Nasdaq eVestment released Institutional Management: Fees in Focus, offering a look at the current landscape of separate account fees and the differences between the actual fees paid by public plan investors and fund managers’ stated fees for those accounts.

The report contains data on the stated management fees of 1,139 separate account structures from within eVestment’s Analytics platform, and 88 cases of actual fees paid by public plans and their corresponding managers’ stated fee comparisons, using documents uploaded to eVestment Market Lens. Asset managers can leverage the report as competitive intelligence and insight into what their peers are actually charging public plan owners.

Three key takeaways from the report for Asset Managers include:

A Sea of Fee Dispersions is an Opportunity to Competitively Position Products

Findings from the report show uniformity across fees at common investment sizes; however, in some instances there are notable deviations. For example, fees for US Large Cap Growth strategies are more widely dispersed than EAFE Large Cap Growth strategies. While the variation may be attributed to investment approaches and styles within the same market, it presents an opportunity for mangers to best distinguish and position their products relative to their peers when competing for mandates.

The Need for Greater ESG Fee Transparency is Apparent

Median management fee differences for ESG vs. non-ESG strategies do not appear to highlight the true differences in cost structures for operating an ESG-focused product, with minimally observed variances between the two. There is a growing need for greater fee transparency from managers in articulating the economic impacts of operating dedicated ESG-focused products so that investors understand the total picture.

Tailoring Fee Type Offerings is Key

Not only are negotiated discounts an understood norm, but the type of fee structure matters for managers to remain competitive as well. Plan documents in eVestment Market Lens report on negotiated fee discounts by way of performance-based fee structures. Among 88 public plan commitments analyzed, the managers of 44 products offered a performance-based structure, while 41 managers did not offer a similar structure.

Download the full report for all the insights:

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