Vanguard

Asset managers are embracing new distribution technology, big data and alternative investment strategies.

Close to 80% of strategists cited competition from the mega-managers as their most significant challenge last year.

Fixed-income products designed to minimize interest rate risk are among the leaders.

Just five asset managers hold about 80% of the new money added to the municipal-bond market this year.

Expense ratios associated with the new products range from 0.05% to 0.07%.

The transition is expected to take place within the next 12 to 18 months, however the firm says it will still manage the products’ underlying investments.

The firm’s complicated relationship with these fees is indicative of the industry’s overall struggle to find a balance between appropriate compensation and transparency.

The average expense ratio among the leading 20 is nearly 40 basis points cheaper than what investors paid on average last year.

Eight of the top 10 have less than $100 million in assets.

Though the fees are controversial, there may not be an easy way for the industry to abandon them.