Subscribe to our newsletter

Exclusive
Labor missed a trick with mortgages :
Billions in underperforming funds: InvestSMART

Billions in underperforming funds: InvestSMART

Eliot Hastie
— 1 minute read

New research from InvestSMART has shone a light on the fund management industry, revealing billions in underperforming funds.

Digital wealth provider InvestSMART has found that some of the country’s biggest fund managers are charging fees for no or underwhelming performance.

InvestSMART modelling of Morningstart data has found over $410 billion is invested in underperforming funds after analysing 9,000 funds.

Advertisement
Advertisement

Out of 5,297 funds that had operated for a decade, 28 per cent had underperformed their benchmark indices by an average of 1.88 per cent with fees at 1.74 per cent.

InvestSmart chief executive Ron Hodge said fees were an important part of any equation.

“It is pretty well known in the industry that, over the longer term, most fund managers will underperform their benchmark by the cost of their fees. This is largely because a benchmark does not have any transaction costs,” he said.

Mr Hodge said benchmarks were a hypothetical calculation, but they were an important metric to use.

“Benchmarks are a comparison metric, allowing investors to compare apples with apples when they are looking at a number of investment options,” he said.

Gradually, technology innovation was levelling the field for investors and would have an impact on fund manager fees, said Mr Hodge.

“Fund manager fees have fallen globally over the past decade and we believe advances in technology, along with regulatory change, will continue to put pressure on traditional fee models,” he said.

 

 

Billions in underperforming funds: InvestSMART
Money, cash, InvestSMART, funds
ID logo

related articles

  • Why the opinion polls got it so wrong

    As one of the few politically conservative journalists in a newsroom chock full of left-leaning voters, it’s comforting to know that most ...

  • Labor missed a trick with mortgages 

    EXCLUSIVE Aussie Home Loans boss James Symond has described the mortgage industry’s mammoth lobbying efforts as a “case book study” in...

  • Blue Sky in receivership

    Brisbane group Blue Sky Alternative Investments has gone into receivership following the breach of its $47.7 million loan facility from US-...

promoted stories

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.