An asset owner survey conducted by bfinance has found that investors worldwide are grappling with cost management challenges amid persistent inflation, heightened ESG requirements, and regulatory burdens.
Nearly 200 asset owners (including pension funds, insurers, and endowments) in 22 countries were surveyed.
The findings have been published in the ‘Investors’ Costs and Fees’ report, dated July 2023.
On a like-for-like basis, 34 per cent of investors reported increased fund servicing costs over the past three years.
Some 46 per cent say management fees have declined; however, nearly one in four have experienced an increase in ad-hoc expenses.
Some investors have observed higher ‘market impact’ costs following recent market volatility and periodic fixed-income liquidity constraints.
There is a high level of dissatisfaction with transparency across transaction costs for asset owners, with only 27 per cent of investors happy with the openness of market impact costs and 45 per cent for trading/brokerage expenses.
In contrast, 83 per cent of investors are satisfied with the transparency of management fees, illustrating stronger adhesion to variable market impact costs.
Investors are also dissatisfied with cost comparability even more than cost transparency. Regarding transaction costs, 14 per cent are happy with the comparability of market impact costs and 24 per cent with trading/brokerage expenses.
Additionally, investor dissatisfaction with management and performance fees is at 7 per cent and 48 per cent, respectively.
Two-thirds of investors are broadly satisfied with both the transparency and comparability of costs in fixed income, versus just 16 per cent in private markets and 18 per cent in liquid alternatives.
Some 44 per cent of investors were not satisfied with the current level of cost transparency.