Invesmart Sets 58bps as Reasonable Fee for Plan Ptps

May 30, 2006 ( - Invesmart Inc. has determined that 58 basis points or less is a reasonable standard for investment management fees paid by retirement plan participants annually for an all-equity portfolio.

A balanced (60/40 equity/fixed income) portfolio should cost plan participants no more than 51 basis points, according to an Invesmart press release. Compared to Invesmart’s Retirement Portfolio Cost Barometer from November the two averages increased by one basis point (See Invesmart Plan Fee Benchmark Set at 57 bps ).

Within specific asset classes the average fee was in most cases the same as it was six months ago. A decline in the average management fee for Small and Mid Cap US Equity funds was offset by an increase in International Equity fund fees, largely due to the addition of a Foreign Large Cap Growth category, the release said. Removing the impact of the new category, the average all-equity fee would have declined by one basis point, and the balanced portfolio fee would have remained the same in the six-month comparison.

“Our barometer continues to show that mutual fund firms are holding a tight rein on investment management fees,” said Rob Rossi, VP & Director of Investment Research for Invesmart, in the news release. “For the past several years, we’ve seen fees trending sharply downward in response to competitive and regulatory pressure, and retirement plan participants have benefited as a result.”

The average investment management fee, as determined by the Barometer, for each asset category for the current and prior period, respectively, are as follows: 

  • Large Cap US Equity – 44 bps, 44 bps
  • Small/Mid Cap US Equity – 84, 88
  • International Equity – 73, 61
  • US Fixed Income – 40, 40
  • Cash Alternatives/Ultra-short Term Bonds – 29, 29