Cost of investing 'too high'
Richard James, chief executive of NZ Funds, said his firm anticipated that the revenue it generated for each dollar it managed would have to come down over time.
He said the costs of investing were too high. “Across the spectrum, they are going to need to come down over time, driven by the historically low risk-free rate and lower future return expectations.”
Increasing global competition and technology disintermediation would also play a part, he said. “What fund managers can charge in fees isn’t really the issue – if people want to they can charge fees in lots of different ways. What level of fees can managers justify in terms of their value contribution, that’s the question.”
Christopher Douglas, director of manager research ratings, Asia-Pacific, for Morningstar, said a challenge for New Zealand fund managers was the size of the market.
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