Headline fund fees could only represent as little as one fifth of the total charges levied by asset managers, according to research by one of the UK’s largest pension funds.
The FT reports Railpen investments, which manages £20bn for 350,000 scheme members, pays around £70m annually in fees disclosed by fund groups.
But chief executive Chris Hitchen told the FT atotal charges are “multiples of that number, 300-400 per cent of that.”
Hitchen says: “What we are getting billed is far less than what is being siphoned off underneath. I don’t think many people have done the analysis. I would think that most people in our position would not be aware of what they are paying.”
Hitchen added that additional fees were particularly high in large portfolios of private assets, particularly private equity and venture capital funds, where managers typically levy fees on committed capital and charge their expenses back to the fund.