The number of offshore funds with rising management fees is increasing, according to Fitzrovia International, a London-based Fund research company. Furthermore, the fee increases are greater than years past, according to the firm.
Of the offshore funds that Fitzrovia tracks and which raised annual management fees in 2000, the average increase was10%. In 1999, the average increase was only 1%.
Annual management fees may not be the most relevant statistic, however. Fitzrovia calculates a total expense ratio for the funds it monitors, which includes administration, custody, audit and legal fees.
For example, Generali Internationals actively managed equity funds have an average management fee of .56%, however including those additional costs, the total expense ratio for those funds is actually 0.97%. AIG & Unigestion Asset Managements equity funds have an average stated management fee of 2.08%. However, when the other factors are considered, the fee jumps to 7%, making it the company with the highest expense ratio of those Fitzrovia tracks.
The average separation between the two is not as severe, however. For actively managed equity funds the average total expense ratio is 1.94%, compared to an average management fee of 1.25%.