Addressing fees and performance head-on

The continued focus on fees has resulted in more efficient models and portfolios populated with low cost smart beta. Where can costs continue to come down and at what point does the consideration of fees become too prominent? Further, what ways can the research community measure the impact of active management and implementation of portfolios

• Cost-saving through implementation – are we at ground zero?
• Could researchers be more proactive in penalising high fees?
• Considering the role of active and passive in the prevailing environment
• Benchmarking and performance measurement

SPEAKERS: Andrew Conners, co-founder, Quilla Michael Furey, principal, Delta Research & Advisory David Walsh: head of Investments, Realindex MODERATOR: David Bell, executive director, The Conexus Institute

Key takeaways

• Amid debate about the variables that go into the performance measurement of active fund managers, RealIndex head of investments David Walsh says both retail and institutional clients are becoming more and more discerning as to the different metrics involved.
• Walsh said he’s observed an “evolution” in peoples’ understanding of the way performance should be measured. Distinctions that were previously only in the realm of fund managers themselves are common knowledge among investors of all classes.
• For money managers, this democratisation of understanding means the performance metrics used need to be accessible and understandable for a broader range of clients.
• There was a consensus among panellists that among the factors contributing to any analysis of fees and performance, the difference a manager adds with their own knowledge and nous is the most important.
• Melville noted that while WTW also focusses on the “idiosyncratic, true alpha component”, the firm also incorporates ESG and past performance metrics into their assessment.

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