Issue - meetings

1.1.        The Board considered a report on the level of investment managers’ fees for 2016/17.

1.2.        SM observed that it was tricky to judge the future cost of investment management fees given the effect that ACCESS pooling will have on them.

1.3.        The Chair took the point that the considerable increase in the value of the fund outweighed the smaller increases in managers’ fees, but he cautioned that the considerable increase in the fund’s value does not necessarily justify the fee increase, as there is no way to judge what would have happened to the fund’s value without the investment managers’ involvement.

1.4.        AE observed that annual increases in the fees have fallen from 9% to 1% despite the continued increases in the fund’s value, indicating a recognition of the pressure to reduce fee costs.

1.5.        OO said that officers were doing their best to get managers to review their fees and had successfully reduced the State Street fee by £137,000. State Street, however, did not bid for the passive investment framework.  

1.6.        The Chair observed that investment fees never used to be the issue – client relationship and fund performance were the key determinants of the value of an investment manager. There has, however, been a change in the last few years towards ensuring that managers reduce fees wherever possible.

1.7.        The Board RESOLVED to note the report.