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Morningstar says fund fee reduction continues in most countries

Morningstar’s results show that investors in many countries are taking advantage of a wider selection of fund options and becoming more selective on cost basis — a trend that has put the onus on wealth managers to justify their fees.

However, product costs remain consistently high in a small number of jurisdictions, notably Italy, Taiwan, Hong Kong and Singapore, where banks dominate fund distribution.

Market factors alone show no sign of reducing spending there. Morningstar adds that in many places, the no-bundled fee regime has increased transparency for advisors, platforms and clients by breaking down the fees paid to fund managers.

Still, according to Kenway, “the use of high spreads of upfront fees and embedded ongoing commissions across 18 European and Asian markets can lead to a lack of clarity for investors.

He further added, “We believe that this may lead to misaligned incentives that benefit distributors, especially banks, over investors.”

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