The performance of subadvised funds versus those managed in-house is a mixed bag, according to
Although higher expenses for subadvised funds are partly to blame, farming out the management of funds makes for good business, according to Lipper, since a subadvised arrangement almost always leads to more assets under management. While subadvised funds typically offer breakpoint discounts, thereby lowering the profit spread of fund companies, the benefits of the new assets far outweigh the lower margins, according to Lipper.