In many asset classes, median Ongoing Charges Figures (OCFs) have risen even as median Annual Management Charges (AMCs) fall. This reflects higher additional expenses. The survey highlights that active global corporate bonds and global passive equity are notable exceptions to the general decline, with fee rates rising.
Since LCP’s last survey, there have been various developments in fee rates offered by investment managers to institutional investors across the core asset classes. LCP used an illustrative £50m mandate size to show the impact in real-money terms.
Findings include:
The median AMC for the global active equity asset class has fallen by 0.07%, or £35k; however, surprisingly, the OCF has increased by 0.01%, or £5k.
Similarly, for active ESG equities, the median AMC has fallen by 0.02% or £10k, whilst the OCF has increased by 0.08% or £42k.
For global passive equities, the median AMC has increased by 0.07% or £33k.
For global active corporate bonds, the median AMC has risen by 0.06% or £28k.
Across pooled dynamic LDI funds, we’ve seen a decrease in the headline median AMC of 0.09% or £45k.
The survey also highlights several market themes and trends:
UK DB pension schemes
For a £500m pension scheme, the aggregate fee rate being paid has fallen steadily from 0.41% in 2017 to 0.34% in 2025. This is equivalent to a saving of £350k per annum, all else being equal. What’s driving this is a combination of changing asset allocations and changes to fee rates across the underlying asset classes. The biggest impact is the reduction in equity allocations, which has nearly halved since 2017, and a subsequent increasing allocation to cheaper Liability Driven Investment (LDI) and bond mandates. This developing asset mix has been a long-term theme as pension schemes de-risk with improving funding positions.
Total assets in UK DB pension schemes have fallen over the period from £1.5 trillion to £1.1 trillion. From the point of view of the investment management industry, there has been a fall in fee revenue from UK DB schemes of around 40% since 2017.
Active equity and bond fee rates are moving in different directions
Active equity fees continue to fall, while active corporate bond fees are rising. Higher interest rates have driven demand for credit strategies, with global active corporate bond fee rates increasing by 0.06% (£30k on a £50m mandate).
Zero-fee funds: appealing headline, hidden drag
In the last few years, we have seen the growth of zero fee index tracking funds. On the face of it, these look very appealing - no fees with minimal risk of underperforming the benchmark index - however, on closer analysis, there is often a tax drag, which can, in some cases, be bigger than any fees saved.
LDI after the mini-Budget
In LDI pooled funds, the headline average fee rates are down. However, adjusting for the leverage change before and after the mini-budget to maintain the same level of exposure, LCP found that the annual fee has risen by about 0.03%.
Managers' business changes to respond to lower fees
Active fee rates have fallen over the past decade as passive investing has grown. Many managers are responding through mergers and expansion into private markets, which typically command higher fees. Whether this move into private assets will help increase profitability and offer investors better value remains to be seen.
Matt Gibson, Head of Investment Research at LCP, said: “Headline fee reductions can look positive, but they don’t tell the full story, and for many asset classes, overall fees and costs can be both complex and opaque. It’s really important that investors understand the fees and other costs they are paying and how they compare with other similar products.
“Our survey shows that overall costs in pooled funds are often rising, driven by additional expenses and new charging structures. Investors need to dig deeper than the headline management fee and focus on total costs to ensure they’re getting genuine value for money.”
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