Dutch pension funds spent an aggregate €4.5 billion ($6.1 billion) on investment management fees in 2012, equating to 0.53% of their total investments, according to data from De Nederlandsche Bank, the Dutch central bank.
The DNB said in a news release that private equity and hedge fund investments were the most expensive investments in 2012 for the 278 pension funds it analyzed, charging total fees — covering both management and performance fees — of 3.43% of invested assets for private equity and 3.38% for hedge funds.
The data follow stricter rules from the DNB requiring that pension funds provide more detailed reports on the investment management fees they spend. This is the first time the fees have been reported to this level of detail.
Equities fees amounted to a total of 0.25%, while fixed income was 0.12%.
The DNB said the higher fees charged by alternative investment managers must be considered against the potential returns available from an investment and the risk they carry. While private equity carried a high fee relative to other assets, it produced 9.6% returns, net of costs, and 6% risk in 2012.
Fees paid by pension funds varied from less than 0.05% of a fund's total investments, with four funds reporting these charges, to 56 funds reporting fees of more than 0.5%. Most of the funds, 222, said they paid less than 0.5% in investment management fees.
A spokesman for DNB was not available to comment by press time.