Funds wake up to high fees

The game's up when it comes to fund managers' fees. The returns you get on your investments don't justify this ludicrous expense - and they're running out of excuses for it.

If you have been holding private equity (PE) funds over the last cycle it will come as no surprise to be told that the industry is generally better at "enriching its own managers than producing investment profits". That, at least, is the conclusion from an investigation into PE returns by the Financial Times. The good news is that those who invested in PE from 2001 to 2010 did make a positive return (4.5%), something that you could say makes the average PE manager superior to the average traditional fund manager.

The bad news, however, is that returns should have been a whole lot higher. Add up all the money US pension funds have paid to their managers over the last decade and, according to Yale's Professor Martijn Cremers, "about 70% of gross investment performance" has gone in fees.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.