Broadridge Releases Fund Fee Trend Report

Broadridge recently released its 2024 fund fee report titled “US & European fund fee trends; Exploring a decade of transformation.” The report highlights the increased fee pressure asset managers are facing and the analysis of the resulting impact. The report found “[o]ver the past ten years, asset-weighted total expenses for both actively managed funds and passively managed funds (including ETFs) have trended downward” with the largest decreases seen in the US and the UK. The report makes the following findings:

• Pivot to Passive: This trend reflects a broader global movement towards lower-cost, transparent, and efficient investment strategies.
• Industry Consolidation: Large asset managers are expected to maintain stable fees, while mid- to small-sized managers must focus on cost efficiency to stay competitive.
• Rising Fees in Niche Areas: Some active ETFs and private investment access may see a slight rise in fees due to specific investment mandates.
• Share Class Pricing: Competition among fund managers over the last decade has exerted downward pressure on funds, while also providing investors with access to new, previously unavailable share classes.
• Regulation: Compliance costs have increased significantly for asset managers while costs they charge investors have gone down— these two forces have an impact on revenue and are an area of concern to the long-term viability of asset managers.

The report notes that these changes are more easily absorbed by the larger asset managers. For small- to mid-sized managers, a decision will need to be made, weighing margin versus cost. The report concludes by noting, “…regulators and asset managers will need to realize that costs can’t continue to fall forever, at least for funds, if we as an industry are to provide strong investment management, liquidity, and fiduciary oversight.”

Click here to read Broadridge’s fund fee report for 2024.