Investing

Three Takeaways on Equity SMAs from the Institutional Management Fees in Focus Report

Authors

Nasdaq for Asset Owners

Andres Ramos

Published

Sep 11, 2023 5:53PM EDT

New insights on SMA fees from eVestment

Using the management fee data from Nasdaq eVestment and Mercer Trends, the Institutional Fees in Focus report explores the current landscape of separate account fees and the differences in actual fees paid by public plan investors versus managers’ stated fees. The latest edition of the report focuses on equity separate account strategies.

Here are three key takeaways from the report.

US Core equity managers state lower fees in Small Cap segment

The stated fees for US Core equity managers were consistently lower than their Growth and Value manager peers for US small cap SMA strategies. Stated fees for Growth and Value managers were consistent through the $200 million investment size threshold. Starting at $300 million, Growth manager fees were slight less than Value, but still more than Core.

Ex-US Small Cap strategies cost more

Stated fees from Small Cap strategies were consistently higher than All Cap and Large Cap strategies across ACWI ex-US, EAFE, Emerging Markets, and Global geographies. Also worth noting, Emerging Markets strategies had the highest stated fees and the lowest levels of fee step-downs at larger SMA sizes.

Larger portfolios mean lower fees while conviction and differentiation cost more

Managers with a higher number of holdings in Q1 2023 almost consistently charged less than peers – up to 20 bps less. However, managers whose portfolio holdings differ most from the benchmark (high active share) and those with high convictions (greater portfolio concentration in top 10 stocks), tend to charge more.

Click here to download the full report for more insights on equity strategy separate account fees.