Insights into the business of investing.

BlackRock unit holders given 45% fee cut 

BlackRock unit holders given 45% fee cut 

BlackRock has moved two dozen funds from conventional active to systematic quantitative management. In the process they have dropped their prices, in the case of the Large Cap Core Fund from 88bps to 48 bps. These will be distinct from the range of stock-picking funds that will now become true conviction portfolios, still charged at the old normal rate.

To compete on price firms will need to compete on costs. The middle and back office have been the subject of many operational reviews. The focus is moving. Investit has a new benchmark for Investment Platform Effectiveness which shows CIOs and COOs where improvements could be made.

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Less than 30bps for active global equity fund management?

Less than 30bps for active global equity fund management?

Bailie Gifford has reduced the charges on their £5bn Scottish Mortgage Investment Trust. The first £4bn will be run at 30bps with anything over that charged at 25bps. This is a long way below the 75bps-ish generally charged for active equity.

Some fund managers have told us they are not expecting price competition among active managers. They simply expect to share a smaller pie. This move suggests that the fight for the remaining slice of pie might be based on price as well as performance and service.

To compete on price, firms will need to compete on costs. The Middle and Back Office have been the subject of many operational reviews. The focus is moving. Investit has a new benchmark for Investment Platform Effectiveness which shows CIOs and COOs where improvements could be made.

 

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