
Are portfolio manager fees “the only reliable predictor of performance”? “The lower the fees, the higher the returns realized by investors.”[1] It depends. In a pooled investment vehicle, where the client is merely a creditor of the real owner of the investment, perhaps. For separately managed accounts made up mostly of individual common stocks, probably not. The difference between an active management fee of 100 basis points on a $1 million account and an average 35-basis-point fee for most passive investment vehicles is substantial. Some passive vehicles have lower fees and some predict we will see 10-basis-point fees or lower as investment firms race to lower fees.