Fee arrangements survey

FEE ARRANGEMENTS SURVEY

In a time of low returns it’s more important than ever to understand the level and structure of investment management fees pension schemes are paying. In 2015 the PLSA undertook research to examine fee structures for Defined Benefit schemes with external asset managers.

This scoping research produced some interesting preliminary findings.

PRELIMINARY RESULTS

Results from our initial scoping survey suggested that there are issues worthy of further investigation.

  • There is a wide range of fees paid by our members for asset management services, as displayed in Table 1.
Table 1: Range of fees paid by members in bps; (p.a) Median Min. Max.
Equities 52 2.5 350
Fixed Income 20 0 260
Alternatives 80 20 200
Liability Driven Investment (LDI) 4.5 4 11
Multi-Asset / Balanced Strategy 65 10 75
Other 51 4.9 200
  • There is a lack of adequate fee disclosure by fund managers, despite the fact that the high priority place on this for our members; members report full disclosure; only 6% of mandates have full disclosure of costs.