INSTITUTIONAL MANAGEMENT FEES: ARE THE ANNUAL FEES YOU PAY FOR MONEY MANAGEMENT APPROPRIATE?

Sherry L. Jarrell and Edward S. O’Neal

The authors quantify and analyze the current annual fees in the institutional mutual fund industry. They identify the primary determinants of fund expenses and develop a methodology for gauging whether fees on an institutional investment are consistent with other similar alternative investments. This methodology treats fixed income, domestic equity and international equity funds separately and can be applied to the pricing of potential separate account service providers as well as institutional mutual funds.