Know Your Fund Operating Costs?
International eXcellence looks at FITZ Partners Ltd a London-based fund research company specialising in the detailed calculations of fund fees and expenses and the delivery of Pan-European fund fee benchmarks.
FITZ Partners founder Hugues Gillibert feels lucky; at 45 years old and after 4 very successful years as Head of New ventures for a large financial data provider, he is back in the world of entrepreneurs where hard work, team effort, client focus and business partnering are a way of life!
A pioneer in fund cost calculation in Europe, from 1996 Hugues developed Fitzrovia International alongside Paul Moulton before selling the business to Lipper, a Thomson Reuters Company. Some years later Hugues set up Fitz Partners Ltd, a fund research company focusing almost exclusively on fund costs.
Pressed by the regulators, the fund industry has improved greatly in the last 10 years when it comes to disclosing levels of costs borne by funds. Retail investors should be thankful to be offered diverse figures such as Total Expense Ratio (TER) or Ongoing Charges Figure (OCF). Both ratios follow very similar methodologies and in most cases give a fair estimate of some ongoing costs paid out of their invested wealth.
What could be regarded as a good enough figure for a retail investor might not be the same for a fund selector or a wealth manager. Should we trust an equity analyst who would base his or her recommendations on profitability or cost ratios only, without a deeper look into what makes these ratios?
FITZ Partners offers the ability to drill down and support investment decision making processes. Through consistent calculations, they unwrap all the consolidated structures of audited fund accounts. The split of all fund expenses by share class allows readers to discover what lies behind these published ratios.
Whether you qualify for an institutional, retail or the recently introduced “clean” share, you will be able to measure each particular operating cost borne by that share class: Administration, Custody, Audit, Transaction, Distribution, Performance, Brokerage, etc.
Fitz Partners goal is to give professional investors and institutions access to this unique quality of data and add value to their due-diligence process. They will be in a better position to evaluate each and every cost paid out of the funds assets and take a view on how a fund is run from an operational perspective compared with its peers.
The fund selectors are not the only ones benefiting from FITZ Partners’ works. Hugues is delighted by the support his business has received from their partners the asset managers themselves. Much like professional investors, they have had a desperate need for detailed cost comparison data.
In a time where all businesses, including asset managers are looking so very closely at profitability, FITZ Partners offers a unique set of expense benchmarks to measure their own costs against their peers. It is only good business practice to review operating costs periodically and whilst pressed by stiff competition most asset managers compare their overall total costs against others. Nowadays more and more conduct deeper fee analysis of each expense category based on FITZ Partners fee benchmarks.
In a small office in the West End of London, a talented team of people are relentlessly calculating fund expenses. All are totally committed to this business which is based on quality and unique expertise acquired from years of experience.
This company has all the marks of success and if their work pushes down the overall level of cost supported by investors along the way and increases transparency - the whole industry will benefit!