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Money Management

Callan: External money manager fees paid by asset owners hold steady in 2016

External money manager fees paid by asset owners remained steady in 2016, according to the latest Investment Management Fee Survey from Callan.

The survey, which gleaned data from 59 institutional investors with $1.1 trillion in total assets and 279 money managers with $13.9 trillion in assets under management, found that in 2016, asset owners paid a median 38 basis points in money management fees across their total funds, unchanged compared to 2014, the year from which the previous survey's data originates.

Foundations and endowments have historically paid the most in management fees, with a median 68 basis points in 2016, up from 55 basis points in 2014, while corporate pension funds paid a median 37 basis points and public funds paid a median 36 basis points, both steady from 2014, according to the survey.

Also, asset owners with fewer assets paid a premium for money management fees, with funds with less than $1 billion in assets paying 65% more than funds with between $1 billion and $10 billion in assets, and 91% more than funds with more than $100 billion in assets.

By asset class, the median fee for domestic equity was 34 basis points in 2016, down from 38 basis points in 2014 and 43 basis points in 2012. Non-U.S. and global equity's median basis points rose to 45 basis points in 2016 from 24 basis points in 2014 and 25 basis points in 2012. Fixed-income fees rose slightly to a median 21 basis points from 19 basis points in both 2014 and 2012, and alternatives had the highest median fees at 71 basis points, compared to 67 basis points in 2014 and 71 basis points in 2012.

Of the 59 institutional investors that participated in the survey, 26 were public pension plans; 20 were corporate pension plans, 12 were foundations and endowments; and one was categorized as other.

The survey report is available on Callan's website.