Fee compression, service bundling and firm aggregation are industry trends changing the way advisors do business — and the segments they serve.
Increasingly, staying competitive means broadening your market reach. To do so, consider how you can pivot your investment conversations toward different dimensions of value, or what we refer to as operational alpha.
Getting to Operational Alphaii
Fees and trading costs for international equity mandates can gradually erode portfolio value over time and create a drag on relative benchmark performance.
Selecting a low-cost index fund generates meaningful savings. For strategies with comparably low fees, better tracking may lead to additional inherent cost
savings beyond the IM fee.
We are committed to supporting the advisor community in growing and evolving prosperous practices. As part of this commitment, we’ve hosted a series of events for the country’s top retirement plan advisors through which we’ve gained insights across the business life cycle. Here, we share those findings, along with a content series dedicated to furthering advisor acumen across each business stage.
1Assumes open market trading cost of 28bps and management fees of 14bps. Open market trading cost of 28bps is an estimate that combines the expected explicit costs of commissions, taxes and fees with a mean estimate market impact cost. Management fees of 14bps reflects the highest fee for Commingled Fund products reported by the 10 largest managers in the eVestment ACWI ex-US Passive Equity universe, as of 9/30/18, assuming a $250M allocation.
2Difference between the highest (14bps) and lowest (7bps) reported Commingled Fund fees for the 10 largest managers in the eVestment ACWI ex-US Passive Equity universe, as of 9/30/18, assuming a $250M allocation.
3Average historical lending returns paid to the fund in the State Street MSCI ACWI ex USA IMI Index ERISA DC strategy from 2014-2017.
4MSCI Index Data, published ERISA and RIC Tax Rates, as of 12/31/2017.
5Estimated cost savings from In-kind/Internal Crossing/Unit Crossing activity in the State Street Global All Cap Equity Ex U.S. Index Fund from January 2012 – October 2018.
This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.
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