The cost of buying and selling shares and other securities adds an extra 50% to the base fees charged by fund managers, according to a new study that claims to be one of the most detailed ever completed on the subject. Transaction costs, which are typically not included in managers’ fees but taken out of a fund to pay brokers before returns are paid to investors, have become a subject of controversy in recent years, with campaigners railing against “hidden fees”. ...
Institutional dealing costs are " clearly material " , according to one of the most comprehensive reports ever completed on the subject . The study , conducted by CEM Benchmarking , found these “ hidden fees ” amounted to zero . A detailed breakdown revealed that relatively high allocations to private investors contributed to the high costs , with equities and bond trades incurring average costs of 6bps and 22bps respectively . Greater transparency , guided by voluntary standards produced by an FCA working group in July , has made obtaining the data easier ; the market now needs to determine whether they are reasonable , according to mark Simmonds , UK principal at CEM .