The analysis published by the research arm of independent data provider ClearGlass Analytics shows real, asset owner-specific fees differ greatly from those presented in the public domain.
London, 13 June 2022 – ClearGlass Research has published its second analyst report focusing on the Absolute Return Bond Fund universe, finding that asset managers charging lower fees deliver better value for money for their end clients.
The report provides industry leaders with deal-specific fee data collected via the Cost Transparency Initiative (CTI) framework. The research arm of ClearGlass Analytics has developed a proprietary database for Absolute Return bond funds, which served as the basis for this report. The database comprises 31 asset managers, alongside 115 pension scheme clients, across a total of 361 mandates. Of the 31 asset managers, the report identifies the top 20% of asset managers providing the best value for money for their clients in the Absolute Return Bond funds.
Key findings from the report include:
The correlation between performance and ongoing charges is negative – According to the report, there is no performance premium within the absolute return bond asset class. Therefore, institutional investors do not get the benefit of better performance by paying more in fees.
Low transaction costs as an indicator for top-quartile performance – There is a weak negative correlation between performance and transaction cost across the entire universe of absolute return bond funds. However, the data suggests that top-quartile performers incur very low transaction costs, suggesting asset managers with the best performance have lower levels of transaction costs in comparison with their peers.
Investors can achieve greater economies of scale by increasing the size of their allocations – Public factsheet data suggests ongoing charges increase in correlation with allocation sizes. CTI data however shows the opposite is true. Investors are thus encouraged to negotiate harder for lower fees as allocation sizes increase.
Consultants’ data does not solve the transparency problem – A comparison of consultants’ data with CTI data suggests that consultants only capture half of the difference between public and CTI ongoing charges.
The scale and accuracy of the independently gathered CTI data, delivered through the ClearGlass Analyst Report is designed to give both asset managers and asset owners a true picture of how the market is functioning and to support managers in pricing their services at the optimal level.
The report also identifies two managers, BlueBay Asset Management and US-based REAMS Asset Management – ‘elite’ managers with both alone in ranking in the highest quartile for costs and performance.
The implications of the difference in fee levels from data collected from public sources and consultant sources versus those that are deal and client-specific are profound and contribute to an inefficient and stagnant market. Unfortunately, the absence of publicly available accurate data has, up to this point substantially distorted the market for absolute return bond funds as public data remains unreliable and off the mark. Investors and good-value-for-money asset managers would benefit greatly from the transparency that CTI data offers. - Dr Christopher Sier, Research Director at ClearGlass Research
Media Contact For further information, please contact: Brandon Bhatti Hume Brophy +44 (0)7 741 311 824 clearglass@humebrophy.com