A study conducted on managers of UK pension scheme assets, highlights that in 12 months up to September 30, an 11% increase in management fees for market performance alone.
UK fund managers overseeing 80% of the UK’s pension scheme assets, have charged their clients nearly £300million, representing an increase of 11% in additional fees for last years returns.
A new report has highlighted these funds being “let down” by management investors.
The report, conducted by Consultant Lane Clark & Peacock (LCP) highlights a misalignment over fees, fueled by strong markets opposed to superior skills.
Report author and acting partner at LCP stated; “Because assets grew as markets went up, managers have made a lot more in fees, even if actually they did not perform very well for their clients.”
. “Our research demonstrates that when markets rise, investment managers generally get paid higher fees even if they haven’t added any value. In our experience, pension scheme trustees will be better served by negotiating sensibly structured performance-related fees.”
The report also showed a poor level of disclosure relating to indirect management costs. These costs are particularly in property and hedge funds.
LCP highlighted that they believe fund managers are charging a management fee, which is Dependant on the performance of the market and by investment activities and decision made by pension trustees.