Economies of scale benefits of larger funds are not always being passed on to investors, according to analysis of the relationship between fund size and management charges by Fitzrovia.
The fund data and tool provider has analysed more than 2,500 Luxembourg-based funds to arrive at the conclusion. By comparing total expense ratios across funds classed according to funds under management – for example, below $5m, below $10m, and below $25m – against average management fees, the data suggests it is not the case that bigger equals better deals on fees. What is size-related, however, is TERs, which fell consistently in line with funds under management being bigger. This was the case over both one year and three-year comparisons. ”We can conclude that despite the encou...
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