Passive fees at zero? Brave new world for fund groups and investors

Providers could adopt 'loss leader' approach

Passive and active providers appear to be hurtling into a potentially even more disruptive phase in the evolution of the global funds industry.

Whereas the battleground for passive providers over the past few years has centred on the next round of fee cuts as rivals jostle in their race to the bottom, a new report from S&P Dow Jones Indices (The rise of indices is changing the face of investing) suggests this price war can be taken to its logical conclusion in the near future as asset gathering accelerates. Author of the report Angana Jacob, associate director, global research and development, said fees could be pushed all the way to zero "depending on how willing the big firms are to employ a ‘loss leader' approach to attract i...