Ներդրումային ֆոնդի կառավարման վճարի ողջա­միտ մակարդակը/Reasonable Level of the Management Fee of an Investment Fund

Abstract

Despite being of paramount importance to fund managers, management fees could diminish net returns (gross returns net of management and other fees) received by fund members or investors. Finding out the fair and reasonable level of management fees is especially important in the context of pension fund management, as it has not only a mere financial impact but also a social consequence. In this paper, several pension funds are analyzed to find the factors affecting the level of management fees, such as the portfolio management type, the asset allocation, the age of funds, etc. Besides, other types of fee structures (such as performance fees with a hybrid structure) are applied to Armenian mandatory pension funds to figure out the total level of fees relative to the current NAV-based fees. Finally, the active returns of the pension funds are estimated by constructing benchmarks and comparing the actual returns with the returns of benchmarks to check the feasibility of performance fees. As the results show, including performance fees into the current fee structure may not only make compensation to managers more reasonable but also significantly reduce expenses for future retirees.