TIM COHEN: Fees debate eclipses investment performance amid fundamental shift
New focus is linked with global move to more affordable tracker funds that lack discretionary mandates
The fund management industry is facing a seismic shift, with negotiations over fees eclipsing investment performance as the major talking point for the first time in recent memory. "About time," many would argue. The new focus on fees takes place against the backdrop of declining fees in the industry worldwide and even recent news that mega US fund manager Fidelity has launched tracker funds with fees slashed to zero. The issue of fee levels is intimately linked with the global move towards tracker funds — funds that have no discretionary mandate and just track a stock market index. These funds, such as the Satrix funds, typically have very low fee levels and the industry megatrend is towards adopting these funds. They are still in their infancy in SA compared to Europe at perhaps 5% of the total industry, and are tiny compared with those in the US, now at about 30% of funds under management. "The reason fee levels have become more of an issue is because until a few years ago quanti...