Digital investment adviser Stockspot reckons that most of the difference in managed fund performance can be put down to fees.
Stockspot has issued its latest Fit Cat Funds Report, a rating of after-fee funds performance over one, three and five-year periods.
Fit cat funds have beaten their peer group over one, three and five years and by more than 10 per cent over the entire period.
Fat cat funds performed worse than their peers over one, three and five years and underperformed by more than 10 per cent over the whole period.
Most fit cat funds have low fees and most fat cat funds have high fees, Stockspot says.
Stockspot analysed 4102 funds, with a total of $709 billion under management. It identified 521 fat cat funds, charging an average fee of 1.99 per cent a year.
ANZ’s OnePath has 201 fat cat funds, AMP has 87, Colonial First State 47, BT 41 and Zurich 19.
Stockspot identified 587 fit cat funds, charging an annual fee of 1.16 per cent.
Platinum Asset Management was the top performer, with 83 per cent of its funds rated as fit cat funds, 58 per cent of Legg Masons funds were fit cats, 57 per cent of Ausbil’s funds were fit cats, 56 per cent of Investors Mutual’s, 55 per cent of Fiducian’s, an and 45 per cent of Pinnacle’s.
It was Legg Mason’s first entry as a fit cat in the survey. Head of Legg Mason Australia, Andy Sowerby, says the Stockspot report highlights the difference in outcome for “pure play” asset managers and vertically integrated businesses, which did not do as well
“We have a clarity of purpose, whereas the vertically integrated firms tend to lose focus.”
Sowerby says he likes the fact that the survey rewards managers for delivering results over the long term
On the issue of fees, Sowerby says: “At the end of the day you need to have a fee that is appropriate to your objectives. You set your fees according to your benchmark and your goals.”