Management fees are on the decline but other costs and fund servicing charges are on the rise, according to a survey by consultant bfinance of 197 global asset owners with nearly $3 trillion in combined assets.
While some 46% of respondents said management fees have declined, nearly 1 in 4 respondents said they have experienced an increase in ad hoc expenses from money managers. A third of the surveyed investors said fund servicing costs increased in the past three years.
The survey, which was conducted between June 14 and June 21, found that investors face more expenses due to higher interest rates; increased pressure on compliance with environmental, social and governance factors; and continuing market volatility.
Only 27% of investors are happy with the transparency of market impact costs and 45% with trading costs, the survey found.
By contrast, 83% of investors are satisfied with the transparency of management fees.
Investors also find it difficult to compare costs.
Some 14% of investors can easily compare market impact costs, while 24% can easily compare trading expenses. In contrast, 37% and 48% can compare management and performance fees, respectively.
Lack of transparency is a particularly significant problem in private markets, with 44% of investors not satisfied with the current level of cost transparency.
"This subject will likely come under greater scrutiny now that costs in many areas are rising — particularly in fees for fund servicing (custody, audit, legal) and various ad hoc charges passed on by asset managers to their clients outside of the management fees," said Duncan Higgs, managing director and head of portfolio solutions at bfinance, in a news release. "We still see real scope for investors to improve value for money, without compromising on strategic goals, in areas such as transaction cost analysis."