typical bell curve on the mngt fee approach....current mean mngt...

typical bell curve on the mngt fee approach....


current mean mngt fee is 41bps of fee revenue. half the mandates earn above, HALF EARN BELOW....(i know, stating the obvious)....

IGNORING FUM GROWTH and assume steady state, best way to improve the avg bps is to close off low bps funds to new clients (or stop promoting them), let the cheap legacy bleed out OR, redirect them to funds with slightly higher mngt fee in the same class! then on the flip side, grow the larger (top quartile) funds through performance, marketing & sales while doing the same as the bottom quartile - promote client funds into the higher mngt fee alternative within the same asset class (equities [large, small, blends, domestic, global etc], alternatives, income [fixed, cash, debt etc] long/short whateva!!].

im sure we can easily shift the weight to 45bps or more, without impacting fund outflows or compromising client risk tolerance....

Generally the income boutiques barely pay for themselves, legacy BTIM (old pendal) has dragged the PPT legacy avg fum down. the overseas boutiques charge much higher fees (thats why pdl bought them), so focus on performance and marketing those.....then champion all the higher mngt fee alternatives in the same class, removing headcount as the legacy fades....

sounds easy hey

as i said before....itll take time.....but my rough ebitda table clearly highlights the $$$$ benefits....intersection of 45bps and 70% cost ratio is a healthy ~$300m ebitda, or $2.30 p/s on a payout ratio of 85%....