The investment management fee retirement plan participants should pay for an actively managed equity portfolio dropped by almost 10% over the past year, according to a study by Invesmart, a national retirement financial services firm. The management fee for a "best-of-breed" institutional quality mutual fund on an "all-equity" portfolio — defined as 65% U.S. large-cap, 20% U.S. small-cap to midcap and 15% international equity — slipped to 57 basis points as of Sept. 30, from 63 basis points a year earlier, according to a news release. The study looked at net investment management fees, excluding servicing and marketing factors such as 12b-1 fees.
Invesmart applies a number of screens designed to identify investment advisers that achieve top-quartile results over the long term with consistent investment styles by reliably "hitting singles and doubles," Rob Rossi, Invesmart's director of investment research, said in a telephone interview. For the latest year, the screens winnowed a universe of 2,400 mutual funds from 200 fund families down to 64 funds from 34 families. By asset class, the average pure management fee by those best-of-breed managers dropped to 44 basis points for large-cap U.S. equities, from 48; to 88 basis points for small-cap to midcap U.S. equities, from 95; to 61 basis points for international equities, from 73; and to 40 for U.S. fixed income from 44.
