Australian and global shares fund manager Forager Funds says it received broad support on its fee structure amid less-than-perfect performance in 2018.
According to The Australian Financial Review, active fund managers remain under pressure to lower fees as clients begin to question the value of returns offered by ‘active’ shops, as opposed to index funds.
Forager’s international fund, which primarily invests in ‘value’ stocks trading outside Australia, charges a management fee of 1.44% without a performance fee.
While its strongly performing Australian fund has a lower fee structure, with a performance fee for outsized returns, index funds and rules-based ETFs are routinely providing exposure to the same asset classes for less than 0.3%. As we reported here, the new BetaShares index fund charges has an industry-leading management fee of 0.07%.
In a podcast episode with The Rask Group, Stockspot founder, Chris Brycki, said one of chief issues with active investors are the high fees and poor alignment with investors.
“The incentives of people providing the money aren’t aligned with people managing the money,” Brycki says.
However, the case can still be made for having some active investing in a portfolio. According to Vanguard, less than 20% of trading on the Australian sharemarket is managed by ‘passive’ index funds, leaving the rest for active traders and investors.