Funds riled by Macquarie fee increase
MACQUARIE GROUP is facing a backlash from fund managers following its decision to more than double the annual fees it charges to distribute their products on its investment platform.
MACQUARIE GROUP is facing a backlash from fund managers following its decision to more than double the annual fees it charges to distribute their products on its investment platform.The increase has come about despite fees across the industry falling generally. Fund managers have warned they could be forced to pass on the higher costs to investors in their funds, which is likely to further erode superannuation returns.Investment platforms are the link, or "hub", in the chain between the consumer and the underlying fund product. Platforms are used by financial planners, given they can easily manage the investment portfolios of clients. They also provide a vehicle for fund managers to secure a slice of the $400 billion in superannuation funds that sits there.From August, Macquarie plans to increase the annual fee it charges fund managers from $9000 to $20,000. At the same time, the fee to list each investment product will rise from $4000 to as much as $7150.The director of Maxim Asset Management, Winston Sammut, said there was no justification for the fee increase, prompting him to pull his fund from the Macquarie platform."You've basically got to pay up to stay on board. I've made the decision to go somewhere else," he said.While small managers will feel the pain of the rise in fees, most, bigger managers will also be caught out because they often have a dozen separate products listed on the platform, with each product attracting its own fee."Ultimately what it means is I've got to pass it on - so the end user will suffer," Mr Sammut said.A Macquarie spokeswoman said the fee overhaul reflected the addition of new services, and the operational costs of the Macquarie platform had increased as it took on the regulatory and compliance costs on behalf of fund managers."We believe that our platform fees appropriately reflect the quality of our service and remain competitive within the market," she said.With more than $24.2 billion in funds under administration, Macquarie is the sixth-biggest platform operator, behind the big four banks and the wealth specialist AMP.Westpac is the biggest platform operator in the market, with a combined $84 billion on its BT Financial and Asgard products.Since the financial crisis, Macquarie has curbed its higher-risk infrastructure deal-making to focus on businesses that give it annuity-style income. This extends to big investments in its wealth management businesses and the management of assets on behalf of superannuation funds.A fund manager with a boutique fund said he was also reviewing his position with the Macquarie platform. "This is not the environment to be passing on higher costs to equity investors," he said.Earlier this year, the Macquarie head of banking and financial services, Peter Maher, told an investor briefing the group intended to dabble in the premium end of the financial services market.