Aussie equity managers under pressure on fees

There is a general “movement downward” when it comes to Australian equity investment management fees, according to asset consultant Activus Investment Advisors.

Speaking to InvestorDaily, Activus Investment Advisors managing director Robert Talevski said institutional investors are successfully negotiating lower fees with Australian equity managers.

“Australian equity management fees are coming down a lot. A lot of people aren’t saying it, but if you make an inquiry you can easily get a good discount,” Mr Talevski said.

“It’s a lot easier to negotiate a fee off the rack rate if you’ve got a bit of money these days. [If you have] between $50 million and $200 million you can get a really good rate.”

It is true that the better-returning Australian equity managers have been able to maintain their fees, Mr Talevski said – but the general trend has been “down”.

The trend towards passive investment strategies and ‘core/satellite’ portfolios by financial advice dealer groups is also contributing to the downward pressure on active fees, he said.

Dealer groups are becoming more open to passive strategies, Mr Talevski said, as they follow the lead of super funds to shift between 30 and 40 per cent of their portfolios to low-cost instruments.

Mr Talevski, who has a background at JANA and Telstra Super, recently co-founded Activus Investment Advisors with former IOOF chief investment officer Steve Merlicek.

Activus is looking to compete in the traditional asset consulting space as well as the IFA dealer group sector.