Fees are very important to German institutional investors. This is shown among other things by the results of a survey of German institutional investors conducted by TELOS GmbH (TELOS) in January 2019. 80 percent stated that fees are very or very important for them. 20 percent are neutral against fees. In order to create more transparency with regard to fees, TELOS carried out a comprehensive analysis of management fees in asset management for German institutional investors at the end of 2018/beginning of 2019.
For the analysis, TELOS surveyed German and foreign asset management companies – broken down by mandate size – on their fees for various asset classes such as equities, bonds and multi-assets and their sub-groups such as corporate bonds. In addition, TELOS has taken into account the fees from tenders that it has accompanied. In total, the evaluation includes fees for over 60 liquid and alternative asset classes. The fee study also includes special cost components such as ESG approaches and overlay offers. The fees for administration services of Master KVGs and depositaries were also included in the analysis. Dr. Frank Wehlmann sums up the study as follows: “Our study confirms that fees tend to rise for more complex investment universes and tend to fall for higher mandate volumes. All in all, the fees are under pressure. “
The results also show that there is a clear difference between the lowest and the highest management fee – sometimes up to factor 4 (see chart 1 “Management fees actively managed mandates up to EUR 50 million” – IG = Investment Grade / HY = High Yield).
The difference in fees between actively managed and passive mandates in the same asset class is around a factor of 4. This means that managing active mandates is about four times more expensive than managing passive mandates (see chart 2 “Management fees for equity mandates up to EUR 50 million”).
The experience from earlier market assessment that foreign asset managers are significantly more expensive than German providers cannot be confirmed by the TELOS fee study. Depending on the asset class and mandate size, some German and some foreign asset managers are more expensive. Overall, the fees of these two groups of providers are now close together (see chart 3 “Management fees for corporate bonds (investment grade and high yield)”).
Interested parties can order the complete study in German or English from TELOS (info@telos-rating.de) for a fee.