Almost two-thirds of fund groups expect the use of performance fees to rise according to research by Skandia Investment Group (SIG), a leading provider of research led investment management solutions.
The research, which is part of a broader study by SIG into the future of fund management, reveals that an overwhelming number of asset management firms around the world believe that the use of performance fees will increase across a range of asset classes this year. SIG believes this trend is likely to be driven in part by the increasing influence on the retail funds marketplace of hedge fund and institutional managers.
The study, the first of its kind by SIG, questioned senior executives at more than 60 fund management groups with combined assets under management of over $7 trillion. The groups were asked about their views on a range of areas and issues pertinent to the future of the asset management industry.
Commenting on the findings, SIG Chief Executive Officer Nils Bolmstrand said: “The asset management industry is under increasing pressure to demonstrate its commitment to producing value for investors. One way active fund managers are seeking to do this is by aligning their own interests more closely with those of investors through the use of performance related fees.
“While much debated over the years, performance fees have never really caught on in any meaningful way outside the hedge fund industry and some areas of the institutional space. Our research suggests this may well be about to evolve and that an increase in the use of performance fees is likely.”