UK - Passive management fee increases will put Barclays Global Investors out of reach of smaller schemes, a consultant claims.
Schemes currently pay BGI a minimum annual fee of £5000 – an amount which, consultants say, funds under £12m can only just afford.
But BGI is understood to be increasing its index tracker fees by £10,000 to £15,000 in April.
Experts say that this sends a “clear signal” that BGI wants to move away from passive management and avoid smaller schemes which are less profitable.
Once the new structure is in place, small schemes will be faced with the choice of paying the higher fee or receiving a reduced web-based service where clients will have limited detail on their investments and no access to a human liaison.
One senior consultant – who declined to be named – said BGI’s decision effectively meant that schemes which could not afford the new fee would have to move elsewhere.
He said: “This is wrong. BGI is effectively saying that Legal & General can have the market.”
Some sources, though, claim Legal & General Investment Management and State Street Global Advisors are also planning to raise their fees – suggestions which both firms have denied.
Another consultant believed BGI was planning the increase because it was not as reliant on its “bread and butter index-tracker business as it used to be”.
Barnardo’s head of pensions Graham Brown said that if firms did not want the business, they should say so. “To muck around like this is demeaning not only to the schemes but to their industry peers as well.”
A BGI spokesman said the company – in common with every other fund manager – kept its fee levels under continuous review.
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