Industry Funds Management (IFM) is conducting a review of its investment management fees and expects to announce a decrease later this year.
In October last year, IFM provided a one-off fee rebate of 12.5 per cent to its clients, and IFM chief executive Brett Himbury said the firm was now looking to offer a permanently lower fee level.
"We are finalising our price review and are likely to move to a permanently adjusted MER (management expense ratio)," Himbury said yesterday.
He said he expected to be able to announce the new price structure in September.
"Prices will be going down," he said.
The reduction in fees was the result of IFM's rapid expansion in the past six years, he said.
The company currently has $34 billion in assets under management and is still growing.
But IFM would also continue to invest in its business, Himbury said.
The asset manager was looking to establish an infrastructure debt strategy in its London office by the end of the year, he said.
"We are establishing a debt team in London. We have been doing it for 14 years in Australia, so why not do it in London?"
He pointed out that infrastructure debt currently had more attractive yields than sovereign bonds, while the sustainability of those returns also looked promising.
Furthermore, the crisis in Europe had led to growing opportunities in distressed debt, he said.
"A lot of this debt is held against good-quality assets, [but] the owners are no longer in a position to fund that debt, and this creates the opportunity for a fund manager like IFM to step in," he said.
In December last year, IFM hired a small-cap team from Macquarie to establish a fund in Sydney, headed by IFM listed equities executive director Neil Carter.
Carter yesterday said the structural changes in the funds management industry convinced him to move from Macquarie to IFM, because the latter had a more sustainable model.
"There is a lot of fee pressure. In a low-return environment fees have got to come down. We wanted to be on the right side of the trade," he said.
IFM was owned by 32 industry super funds and that enabled a greater flexibility in fees, he said.
"They [IFM shareholders] are not looking to make a big fat margin," he said.
Many funds management businesses have traditionally had a strong focus on retail clients, because they form the segment with the highest margin.
But those inflows had strongly decreased since the financial crisis, Carter said.
"I won't go as far as saying retail is dead, but the focus is now on SMSFs (self-managed super funds)," he said.
Many fund managers have found it difficult to gain access to SMSF investors as they are not a homogenous group, while they also tend to favour direct investments.
"SMSFs are difficult to service," Carter said.
