Among those surveyed, only 10% said they see fee cuts as a major impediment to growing their business, up from 42% in 2021.
“Fees are tied to what asset managers offer: for example, in private markets, the complexity and sophistication of products provides the opportunity for higher fees,” Justina Deveikite, director of research for institutional asset management at Cerulli, said in a press release.
Ms Deweikit added in a press release that asset managers should aim to reduce pressure on fees by focusing on asset classes that offer higher margin business, such as alternatives, private equity, emerging market equities and emerging market debt. which, she says, may drive higher fees due to the complexity of the products used.
Looking at individual asset classes, emerging market equities and direct lending/senior debt, one can see the most significant reduction in fee pressure; none of the manager respondents said they expect a significant increase in fees in these asset classes, and less than half expect a small increase. However, for European investment grade corporate bonds, 40% of respondents expect a significant increase in fees, and another 35% expect a slight increase.
When asked what managers’ plans are for protecting themselves from loss of profits and revenues, 33% said they want to target customer segments with less perceived commission pressure, such as insurers or reinsurers, and 10% of respondents said they want to target countries with less perceived pressure to pay.
At the country level, asset managers in some European insurance markets reported reduced pressure on fees, especially in Italy, which, according to Ms. Deveikite in a press release, was due to the fact that Italian insurers usually only outsource niche classes. assets whose prices are already high.
“In addition, they (Italian insurance asset managers) tend to choose collective investment funds instead of individual mandates,” Ms Deveikite added in an email. “In collective investment funds, there is usually no or limited discounting.”
In the UK, only 5% of respondents cited fee pressure as a barrier to growth, compared to 25% the previous year. In Germany, those numbers fell to zero from 13% in the previous year’s survey.