South Africa: Fund Management Costs in SA Have Improved. or Have They?

analysis

Asset managers all over the world have been forced to rethink the value they provide for the fees they charge, and South Africa is no exception. The good news is that locally, fees are coming down. The bad news is that investors in SA are now merely being charged the 'average', down from 'above average.

What should you be paying for good investment advice and balanced investment returns?

According to the latest Morningstar Global Investor Experience study (GIE) released in September, local fee structures have improved from "above average" to just "average" compared with the rest of the world.

But it's a bit more complicated than this because what is included and excluded from fee structures is a bit of a moveable feast.

The biennial report compares unit trust markets across the world, based on the fees investors are paying. This study does not, however, evaluate the potential total cost, including financial advice and brokerage cost, which is not readily available in many jurisdictions, including in South Africa.

Financial advice comes in many different forms, but normally, it's what you pay your financial adviser. Brokerage cost is the fee you pay to actually buy the shares that form part of...

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