One of the most fascinating charts in the latest Platforum report on multi-asset and multi-manager funds is a scatter diagram relating fund flows to fund charges – as measured by average OCFs for different groups. The basic data comes from Morningstar and covers the 12 months to 31 October 2017.
Most of the best selling fund groups have below average OCFs. The star performer in this space is Vanguard way out in front in terms of both group fund flows and also low average OCFs. But Standard Life Investments and LGIM are in the same quadrant. One brand had some of the highest charges with some of the lowest sales in the period under review.
On the other hand, the bulk of fund managers cluster around the neutral line with little or no net growth or net outflows. And they range over a huge span of OCFs – from about 40 basis points up to over 260 basis points, with the overall average being 125 basis points.
So on this basis it looks as if advisers and end-investors are becoming more cost conscious and cost is affecting positive flows. Outflows, on the other hand, seem to respond to factors other than just costs – such as recent performance, ratings by third parties and the departures of fund managers.
From Platforum UK Fund Distribution: Multi-Asset and Multi-Manager, December 2017
Fund group flows by average OCF – multi-asset funds
