{"id":22956,"date":"2009-08-17T09:09:00","date_gmt":"2009-08-17T09:09:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=318"},"modified":"2009-08-17T09:09:00","modified_gmt":"2009-08-17T09:09:00","slug":"lo-fondos-suben-comisiones-cuando-estas-de-vacaciones","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/lo-fondos-suben-comisiones-cuando-estas-de-vacaciones\/","title":{"rendered":"Funds increase their fees whilst you\u2019re on holiday."},"content":{"rendered":"
It\u2019s not a joke or a witty rhyme, but a newspaper headline. According to this article from El Economista<\/a>, the number of Spanish fund management companies that have notified the CNMV this summer of an increase in their fees has more than tripled. Some believe this is due to the fall in returns on fixed-term deposits and on savings in general, which is causing money to flow back into collective investment funds (and as demand rises, fund managers are taking the opportunity to raise prices). But the reality is that, amidst the frenzy surrounding fixed-term deposits offering above-market rates\u2014which highlighted the banks\u2019 accounting desperation\u2014and with massive outflows from almost all funds, the fees charged by these IICs<\/a> they did not fall substantially. And the same can be said if we look for the reason in the inflow or outflow of money on the stock market.<\/p>\n

\"\"<\/a>Perhaps one of the reasons for this summer rise is the fall in asset management firms\u2019 revenues, which have seen a sharp decline in assets under management over the past year, as well as the virtual elimination of the HWM<\/a> and performance fees in their various forms. Faced with this scenario of lean times and falling commission income, fund management companies have opted for the same strategy as the Spanish Government: tax increases. This \u2018bread for today\u2019 approach is deeply ingrained in these parts. However, with so much volatility, fleeting euphoria and the need to recoup in speculative markets what has been lost in the real labour economy, the fund managers are unlikely to go hungry tomorrow either.<\/p>\n

We are still living through turbulent times, including on the stock market despite the current rally, with extremely high volatility and nervousness. And this turbulence opens the door to excessive fees. Let me explain: unlike in calm markets, where modest returns call for commissions that do not unduly erode returns, high market volatility provides the perfect cover for expensive commissions. If a client makes a profit in a highly volatile stock market environment, they will probably do so in substantial amounts and won\u2019t mind paying large and well-deserved (?) fees; whereas if they have suffered losses in a highly volatile environment, they will probably not find it so bad to lose a further 2 or 3 points on top of the 20 or 30% that the market has already taken from them. In both scenarios, there will be a volatile and chaotic market to blame or hold responsible.<\/p>\n

Blame it on the Market!<\/p>\n