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The results of the CIO Sentiment Survey broken down into investment impact and themes

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Costs

Despite a planned shift towards higher cost strategies like private markets, asset owners reported a reduction in investment costs linked to managers increasingly offering discounts to gain new relationships. 2022 respondents indicate that costs have stabilised after several years of steady increases, indicating total average investment costs relative to assets at 48 basis points in 2022 compared to 50 basis points in 2021. Importantly, cutting investment costs particularly around new products, operations or outsourcing was a key CIO priority in the 2021 survey.

Total average investment costs relative to assets was 48 basis points in 2022

Total investment costs in BPS, including internal and external costs

Bps (relative to assets)

45
2019
47
2020
50
2021
48
2022

Most respondents (40 per cent) said that their costs had decreased compared to 31 per cent of respondents responding their costs had stayed the same. Traditional long-only strategies are increasingly subject to discounting with 55 per cent of mandates sold at a discount, up from 50 percent last year. Elsewhere, data revealed the average discount on new mandates was 20 per cent upfrom 15 per cent last year. The data also revealed a growth in the number of respondents seeking a performance-based fee with a smaller management fee.

Still, falling costs is not pervasive across the industry. Some respondents (7 per cent) reported the irinvestment costs had increased by over 6 basis points, a larger cohort than any of the previous years.In 2021 only 3 per cent of respondents reported such a significant spike and in 2020 only 1 per cent. Meanwhile stubbornly high costs will maintain the pressure on high return handles.

WITHIN LONG-ONLY MANDATES, CIOs ARE INCREASING ACTIVE ALLCOATION

% of respondents

1%
25%
25%
25%
22%
3%
13%
38%
33%
15%
7%
21%
31%
26%
14%
2020
2021
2022

key:

Increased by 6+bps
Decreased by 1-5 bps
Remained the same
Decreased by 1-5 bps
Increase