IAPF Spring 2018 Irish Pensions Magazine

26 | IRISH PENSIONS MAGAZINE | SPRING 2018 EXPERT OPINION low awareness or understanding of fees. However, the research findings indicate that trustees are generally good at understanding explicit net of fees analysis (although there was evidence that this was stronger amongst trustees of larger schemes and trustees of smaller schemes had a lower level of understanding). Explicit fees are the annual management charges (AMC) charged by the fund manager. With the advent of MiFID II 3 ), trustees will need to place significantly greater focus on fees to ensure value for money for scheme members. They will need to be aware not only of the explicit fees but also implicit fees and charges which can have an impact on overall asset returns. Examples of implicit fees are dealing costs, bank charges, taxes, custodian As the chart above shows, almost half of trustees choose active over passive investment and prefer equity investment to balanced funds. The significant preference for active investment is interesting in the context of general industrymovement towards indexation and alternative indexation strategies given evidence of the difficulty for active managers overall to deliver excess returns net of fees. Attitude to Costs and Fees The responses on fees and costs were interesting in a context of increasing media and industry attention to asset management costs and fees charged to investors. The responses showing a preference for active funds (where fees are generally higher) might lead one to concludethat trusteeshavearelatively