GERMANY - Domestic asset managers providing active portfolio management raised their fees on institutional investors by up to 10% last year, according to a new study by consultant Georg Seil.

As a result, the average fee for active management of a €50m equity Spezialfonds (German institutional fund) was 35 basis points, the study reflected. For active management of fixed income Spezialfonds, German houses charged 20 basis points.

Seil's study also reflected that in roughly half the cases, investors paid two sets of fees, the first for active management of their Spezialfonds and the second for administration of these funds.

Added a Frankfurt fund expert: "We're also forgetting the brokerage fees, which come on top of the fee for active management and administration. They've come down considerably from a high of 50 basis points, but are still a cost factor for Spezialfonds investors."

"Add all this up and mutual funds targeted at institutional investors (so-called institutional shares) begin to look very competitive from a price standpoint," the expert, who asked not to be named, said.

But Seil's study also showed that fees charged by German asset managers for equity Spezialfonds were 20 basis points lower than those from UK houses. UK asset managers also charged 10 basis points more for fixed income Spezialfonds.

At the end of 2006, the market for Spezialfonds in Germany totalled €669bn after the products took in €48.3bn in new assets.

Separately, German insurance firm AMB said it would allocate €800m to private equity in the short-term, adding that €300m of the total was already invested.

In the long term, AMB, a unit of Italian insurance giant Generali, aims to raise its private equity exposure to €2bn. All told, AMB has €75bn in assets, 85% of which are invested in fixed income.

Asked to comment on Seil's study, German fund industry association BVI said it could not confirm its findings.
"We have no way of telling whether the fees quoted in the study are correct or not as we ourselves do not collect such data from our members," said a BVI spokesman.

Topics