Financial News reports that asset managers might suffer into 2009 according to a study published by Towergroup, a US consultant. It says that investors are changing their attitude to risk and will move towards more conservative investments, with lower fees.

The study confirms a report in the Financial Times earlier this month which said that pension funds are turning to index tracking funds for steady returns and lower charges and performance fees. The article refers to research from Watson Wyatt, which found that research total annual costs of running a pension scheme have increased by about 50 per cent over the past five years.
 

The paper argues that while typical hedge funds and private equity investments operate on a 2/20 fee structure - where the annual charge consists of 2 per cent on the value of the committed capital plus a 20 per cent performance fee - pension funds are paying for outperformance, or alpha, but getting market performance, or beta.

Both articles mention pension funds that have turned away from active management, including the London Borough of Richmond-upon-Thames scheme, which recently put 50 per cent of its assets out to tender for passive investment, as well as two prominent Dutch pension schemes.