In our 2020/21 Business Plan, we made a commitment to provide a range of metrics to assess the impact of actions put in place since our Asset Management Market Study[1] in 2016.
Asset manager profitability
In 2019, we surveyed 38 of the largest UK asset managers representing 74% of UK assets under management (AUM) and saw an AUM-weighted average operating profit margin of 36%, down slightly from 37% in 2015, based on a survey of 36 firms representing 71% of UK AUM.
Ongoing fees for active funds
Our analysis shows that overall, AUM-weighted average ongoing fees for UK-domiciled active funds have declined from 1.08% of AUM per year in 2015, to reach 1.0% in 2018 and then 0.89% in 2020.
Ongoing fees for passive funds
Our analysis showed that overall, AUM-weighted average ongoing fees for UK-domiciled passive funds have declined from 0.29% of AUM per year in 2015, to reach 0.25% in 2018 and then 0.15% in 2020.
Performance after fees of UK-domiciled passive funds
In the 12 months to April 2021, 95.3% of AUM UK-domiciled passive funds tracked their benchmarks to within 75 basis points, up from 92.5% in the 12 months to April 2020, a marginal improvement in tracking performance despite heightened market volatility in the first quarter of 2020.
In summary, the above metrics show a continued downward trend in fees over the past 3 years, especially since 2018. This suggests that our remedies may be leading to improvements in competition in the sector.
Last year we committed to publishing data on long-term underperforming active funds, after fees. Due to other priorities we will not produce this data at this time but will continue to consider appropriate metrics to assess progress in delivering value for fund investors.
Notes on use of data
- All data sourced from Morningstar.
- Fee data includes data from Multi-Asset funds which includes data from the funds they have invested in.
- The data on passive funds is limited to data reported in Morningstar so is not a full data set.