About time?
David Ferguson, chief executive at Nucleus, breathed a sigh of relief as he read the paper.
While index tracking has trended down towards 10 basis points, and institutional active management sits around 20-40bps, the OCF on many actively managed retail funds still sits north of 90bps.
“More than that, the former two categories are more transparent and institutional management typically offers far stronger governance and greater accountability than the retail equivalents. And all that before we go anywhere near the dismal herding instincts of so many retail funds which purport to be active,” he said.
Having recognised the pricing pressures hitting the platform space in recent years, with some players bringing their costs down from 75bps to around 30-40bps, he hoped to see the same impact on the fund management space, and welcomed the ‘all-in’ fee and more transparent reporting requirements.
“Shining a spotlight on the true fee active managers charge retail clients means the days of 90bps funds – which are probably nearer 120bps when other fees and turnover costs are included – might finally be over now that there is a requirement to present an all-in fee. This will substantially reduce revenue margins and should give rise to better client outcomes.”
