Callan's 2023 Investment Management Fee Study Uncovers What Institutional Investors Are Actually Paying

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Nov 29, 2023, 07:30 ET

SAN FRANCISCO, Nov. 29, 2023 /PRNewswire/ -- Callan, a leading institutional investment consulting firm, announced the release of its 2023 Investment Management Fee Study—its 10th examination in over 30 years.

The study provides a detailed analysis of fee levels and trends across multiple asset classes and mandate sizes for active and passive management—covering a total of 23 asset classes, both public and private. The analysis gives insight into what institutional investors are actually paying (negotiated fees) versus investment managers' published fee schedules.

The data was curated using Callan's proprietary investment manager database, proprietary client performance reporting database, and actual client fee schedules. The study reflects trends on 2022 fees representing $609 billion in assets under management (AUM) and $1.5 billion in total fees paid. The firm's fee database includes mandates run by over 300 investment firms and over 180 institutional investors.

"Our study shows continued pressure on actual fees paid for not only active management but now passive mandates as well," said Ivan "Butch" Cliff, study author and Callan's director of research. "The rate of decrease in active fees appears to be slowing as they perhaps approach limits for quality implementation, as negotiated discounts are already common and sizable."

Study's Key Findings

98% of total fees paid were to active managers (a 1% increase from our last study in 2021)
62% of total assets were managed actively (same as 2021)
50% of total active fees went to 12% of the investment management firms
Highest average basis point fees went to hedge fund-of-funds (107 bps) and private real assets (83 bps)
The lowest went to passive U.S. large cap (1.9 bps) and small cap (3.0 bps)
Fee resilience was strongest for global ex-U.S. small cap equity, global equity, U.S. smid/small/micro equity, and global ex-U.S. equity
Fee weakness affected hedge fund-of-funds, multi-asset class strategies, global ex-U.S. fixed, and emerging market equity
Passive usage in U.S. large cap equity increased 4% from 2021 to 73%, while passive usage for U.S. smid/small/micro cap equity declined 4% to 23%
Separate accounts were the most popular investment vehicle by far (59% of products)
Public funds had the largest share of AUM by percent of mandates (39%) and percent of assets (66%)

Find the summary blog post and study here.

About Callan
Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises clients with more than $3 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.

Media Contact:

Elizabeth Anathan

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SOURCE Callan LLC