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Alternative Market Briefing

Study finds difference between quoted fees and negotiated fees depend on strategy

Tuesday, April 30, 2019

Laxman Pai, Opalesque Asia:

How much institutional investors pay in traditional asset management fees continues to be a hot topic, but hard data about the difference between what asset managers say they charge and actual fees charged has been difficult to come by.

According to eVestment's new report, 'The State of Institutional Separate Accounts Fees', the quoted fees went down as the size of the mandate increased, but there was wide variety in the difference between quoted fees and actual fees across the strategies and mandate sizes reviewed.

Among the broad universes covered in the report, large discounts were found in US Small Cap Growth mandates of more than $250m (30 basis points) and All US Small Cap Equity mandates (24 basis points).

The largest difference between quoted fees and negotiated fees was to be found in US Small Cap Value mandates of more than $250m, with a difference between stated fees and negotiated fees of 34 basis points. Though the Market Lens sample size for this group was small, the difference is notable and similar to differences within other small cap segments.

The smallest discount among the universes covered in the report were in All US Mid Cap Equity mandates of less than $100m, at 7 basis points.

All US Large Cap Equity mandates of $101m to $250m, US Small Cap Value mandates of less than $100m and All US Small-Mid Cap Equity mandates of $101m to $250m also had discounts on the smaller side at 9 basis points each.......................

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