Fees charged by global active stock funds differ from those publicly reported, and lower fees generally offer better value, according to analysis released Tuesday by data provider ClearGlass Analytics.
The results were based on a proprietary database of global active equity funds developed by ClearGlass Research. It comprises 79 asset managers who look after 139 pension fund customers in 616 mandates. ClearGlass works with more than 1,000 asset owners and 500 wealth managers in the UK with combined assets of €1.3 trillion (US$1.4 trillion).
According to the report, the top 20% of money managers offer the best value for money in their asset class. Three managers – Baillie Gifford, Majedie Asset Management and Wellington Management International – ranked in the top quartile for both costs and performance.
The analysis relates to specific transactions between asset managers and asset owners rather than publicly available cost information. “The data shows the true extent to which perceived costs differ from reality, and anyone who bases their procurement on publicly available information will inevitably be wrong,” the report states.
The analysis finds a broadly inverse correlation between fund performance and fees and “shows that high fees incurred by institutional investors do not necessarily translate to high performance,” the report states.
CEO Christopher Sier said in a press release that the proprietary framework will provide a market-wide database that “will inevitably help advisors, asset owners and wealth managers make the best decisions for the end investor.”
The analysis is the first in a quarterly series by ClearGlass Analytics that will cover more than 20 asset classes and will focus on the price differential between actual and publicly available price and cost data. Planned future reports include Global Active Income, Active High Yield Bonds and Active UK Equities.
