There has been little change in the majority of investment management fees over the past two years according to Mercer’s 2012 Global Asset Manager Fee Survey. The one area where fees have fallen is in alternatives.

In particular, asset managers are under pressure to negotiate fees for hedge funds, direct private equity and infrastructure funds. Mercer finds that while the industry standard fee was once “2 and 20” (a fixed 2 per cent of assets plus 20 per cent performance fee), this is moving towards “1.5 and 20” as supply and demand dynamics have led managers to be more flexible in negotiating fees.

Within other asset classes, where fee reductions have occurred, the greatest falls have been in equity mandates; retail equity funds have tended to lower their fees more than their institutional and segregated counterparts. Around a third of managers have increased their fees. Most small cap equity strategies have increased fees except in the US where such fees have tended to decrease.

“Given the plentiful supply of good quality active management, the level and structure of active fees has been remarkably resilient to a slowdown in demand,” said Divyesh Hindocha, global director of consulting for Mercer’s investments business.

Taking all asset classes into consideration, in US dollar terms, Mercer found that Canada is the least expensive country in which to invest, with average median fees of around 0.3 per cent. The UK and Europe are also relatively low priced, with average median fees of around 0.4 per cent and 0.5 per cent respectively. Emerging markets are the most expensive region at 0.89 per cent on average, with Asia averaging 0.75 per cent - a fall of 0.08 per cent since 2010.

Mercer’s 2012 Global Asset Manager Fee Survey analyzes data on more than 25,000 asset management products from over 5,000 investment managers.