The availability of never-before-seen data has the potential to unlock a better functioning global active equities market by helping asset managers to price competitively – enabling them to compete on a level playing field for the very first time.
This is the view gathered from an analyst report from the research arm of ClearGlass Analytics, which found that asset managers charging lower fees for global active equity funds generally deliver better value for money, and that the actual fees collected differ greatly from how funds are priced in the open market.
The report provides industry leaders with client-specific, deal-specific fee data collected via the Cost Transparency Initiative (CTI) framework. The data establishes broadly inverse correlation between fund performance and charges – demonstrating that high fees incurred by institutional investors do not necessarily translate to high performance.
The scale of the independently gathered data will give asset managers and owners a true picture of how the market is functioning, and support managers to price their services at the optimal level.
It comes after the FCA’s Asset Management Market Study found that UK asset owners, such as pension funds, are unable to determine the value for money derived from investments. By accessing this game-changing data, asset owners will effectively be able to benchmark whether they are being charged appropriately for the funds they hold.
The research arm of ClearGlass Analytics has developed a proprietary database for global active equity funds, which served as the basis for this report. The database comprises 79 asset managers, with 139 pension scheme clients across a total of 616 mandates. Of those 79, the report identifies the top 20% of asset managers providing the best value for money for their clients in the asset class.
Three managers – Baillie Gifford, Majedie Asset Management and Wellington Management International – were awarded ‘Elite manager’ status as they ranked in the best quartile for both costs and performance. It is thought that the availability of fresh data will allow the best performing managers to differentiate themselves from the rest of the market.
Dr Christopher Sier, research director at ClearGlass Research, said: “The data reveals the true extent to which perceived costs differ from reality. Anyone basing their procurement, or subsequent value for money analyses, upon publicly available data will inevitably be wrong. The CTI template is therefore a game changer – providing a market-wide database that transcends any individual manager’s assessment framework will inevitably help support consultants, asset owners and asset managers to make the best decisions for the end investor.”
