Increased use of passive products including ETFs is driving down fixed fees, says Skandia Investment Group (SIG).
The SIG study shows many global asset management firms expect the use of performance related fees (PRFs) to rise across a range of asset classes.
Two-thirds of those surveyed anticipate PRFs on equity funds to increase in the coming year, while half predict the same on absolute return vehicles.
The survey follows a year in which the number of share classes available for sale in the UK with PRFs has risen from 1,433 to 1,952 - an increase of 36%.
SIG says that if managers' expectations are realised, fee polarisation will occur. As managers move towards increased use of PRFs, pressure from low cost alternative solutions such as ETFs will push down fixed fees.
The findings come at a time when the industry is seeing investors change their focus from relative to absolute returns as a performance measure.
SIG chief investment officer James Millard says: "The increased availability of low cost sources of beta, the increased client demand for absolute returns after recent market volatility, and the rarity of genuine alpha is driving the polarisation in fees demonstrated by the asset managers surveyed."
The SIG study, now in its second year, questioned 40 fund management groups across the globe, with combined assets under management of over $2trn.
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m