Callan, a leading institutional investment consulting firm, announced the release of its 2021 Investment Management Fee Study—its ninth examination in over 30 years.
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The study provides a detailed analysis of fee levels and trends across multiple asset classes and mandate sizes for active and passive management—covering a total of 21 asset classes, both public and private. The analysis gives insight into what institutional investors are actually paying (negotiated fees) versus investment managers’ published fee schedules.
The data was collected and curated using Callan’s proprietary investment manager database, proprietary client performance reporting database, and actual client fee schedules. The study reflects trends on 2020 fees representing $598 billion in assets under management (AUM) across more than 1,700 mandates and $1.4 billion in total fees paid. The firm’s fee database includes more than 300 investment firms and over 160 institutional investors.
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“Perhaps not surprisingly, active management fee pressure for traditional public asset classes continues unabated,” said Ivan “Butch” Cliff, study author and director of research at Callan. “Negotiated discounts below published fee schedules are significant, especially for large mandates whose AUM is firmly in the final tier of a fee schedule. In addition, passive management is now growing in public markets beyond U.S. large cap equity, particularly in U.S. small cap equity and core fixed income.”
Study’s Key Findings
- 97% of total fees paid were to active managers (down 1% from 2019)
- 50% of total active fees go to 11% of firms
- 62% of total assets are managed actively (down 8% since 2019)
- Total asset class dollar fees down most for U.S. large cap equity and hedge fund-of-funds
- Increased passive usage in U.S. smid/small/micro cap equity, U.S. large cap equity, and core fixed income
- Fee resilience strongest for private real assets, global ex-U.S. equity, and global ex-U.S. small cap equity
Study Features
Actual vs. Published Fee Analysis: Compares by mandate size ranges the published fees of the broad product universe, published fees for just those products with client mandates, and the actual fees being paid for those client mandates.
Vintage Analysis: Compares current actual fees for more recently incepted mandates (2016 and after) with those of older mandates (2015 and before) to better measure fee trends over the long term.
Concentration Analysis: Examines the concentration of AUM, mandates, and actual fees/revenues by investment firm for each asset class.
Vehicles: Covers many institutional mandate vehicle types including separate accounts, many types of commingled funds (including collective investment trusts), and various partnership types. Mutual funds are excluded from this study.
Fee Data: In addition to fees paid in basis points, we capture the average discount from the published fee schedules. We also analyze average mandate sizes and average fees paid in dollars to gain insights into the health of the asset management industry.
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