External money management fees — which make up the overwhelming majority of the cost of running a pension fund, endowment or foundation — increased 18% in the past three years, a Callan Institute report said.
The survey, completed in early 2016 by 85 asset owners representing $409 billion in assets, reflects fund costs in 2015 and is the first such survey conducted since 2013, which reflected 2012 data.
The total cost of running their funds — expenses relative to total fund — rose to an average 63.3 basis points in 2015, up 16% from 54.4 in 2012. In the original 1998 survey, respondents had said the cost was 35.6 basis points.
External money management fees rose to 51.7 basis points in 2015 from 43.7 basis points in 2012 and make up an average 93.1% of total fund expenses, rising gradually from 83% in 1998, the report said. Other external advisers, such as consultants, make up 2.5% of total expenses, while custody makes up 1.9%, total investment-related staff compensation makes up 1.3% and other various expenses taking up 1.2%.