Though the demand for active equity funds has fallen, with many companies experiencing net outflows (perhaps driven in DC plans by the growing popularity of TDFs), fees remained stable, according to Mercer’s 2012 Global Asset Manager Fee Survey, the fifth such biennial survey. Mercer’s analysis was based on more than 25,000 asset management products from over 5,000 investment management firms around the world.
Alternatives were the only asset class to experience a drop in fees. Some, like small cap funds, increased fees (though not in the U.S.). Retail funds were more likely to lower fees overall.
Active fund managers are reluctant to compete on price, but as demand wanes for any particular class, the laws of supply and demand may force their hand — as evidenced by alternatives. In DC plans, the fee changes may occur as a function of which share classes are offered rather than wholesale reductions.
