Goldman Sachs Asset Management is to permanently lower management fees on 42 funds, Citywire has learned.
The firm has reduced charges on 11 fixed income offerings and nine quantitative equity funds.
It plans to make further cuts to management fees for its fundamental equity suite and liquid alternative range by April 2018.
The cuts mean the firm will make permanent a series of fee waivers that were already in place on the funds.
Goldman has filed updated prospectuses with the Securities and Exchange Commission for the affected fixed income and quantitative equity funds.
The amount fees are being cut varies depending on the fund. Three funds so far have seen fees lowered by 20% or more.
The largest reduction is for the $1.4 billion Goldman Sachs Dynamic Municipal Income fund, which is run by Ben Barber, where management fees have been reduced by 27% from 55 basis points (bps) to 40bps.
The next largest cut is for the Goldman Sachs High Quality Floating Rate fund, which has seen management fees reduced by 22% from 40bps to 31bps.
On the equity side, management fees for the $1.6 billion Goldman Sachs Large Cap Growth Insights fund and the $631.2 million Goldman Sachs US Equity Insights fund will come down 20% from 65bps to 52bps, the biggest reductions being made to this range.
For a complete list of the fee cuts made so far, see the table below:
|FUND||PREVIOUS MANAGEMENT FEE (bps)||NEW MANAGEMENT FEE (bps)|
|GS Dynamic Emerging Markets Debt||90||80|
|GS Dynamic Municipal Income||55||40|
|GS Government Income||54||53|
|GS High Quality Floating Rate||40||31|
|GS Inflation Protected Securities||33||26|
|GS Investment Grade Credit||40||34|
|GS Local Emerging Markets Debt||90||80|
|GS Short Duration Government||50||44|
|GS Short Duration Tax-Free||40||39|
|GS US Mortgages||40||34|
|GS International Equity Insights||85||81|
|GS Large Cap Growth Insights||65||52|
|GS Large Cap Value Insights||60||52|
|GS Small Cap Equity Insights||85||80|
|GS Small Cap Growth Insights||85||80|
|GS Small Cap Value Insights||85||80|
|GS US Equity Insights||65||52|
The equity funds are managed by the Goldman Sachs quantitative investment strategies (QIS) team with Citywire A-rated Osman Ali, Len Ioffe and Dennis Walsh responsible for day-to-day management of all the strategies except the International Equity fund, which is managed by Ali, Ioffe plus Citywire AA-rated James Park and Takashi Suwabe.
The QIS team has over 90 investment professionals who manage over $110 billion in assets.
The Goldman Sachs Global Fixed Income team is made up of around 225 members who oversee 21 mutual funds for sale in the US.
Goldman's move to make permanent the fee cuts on these funds comes at a time when a number of active managers are under pressure to lower costs to investors in the face of lower prices offered by passive funds.
According to Investment Company Institute, the average active fund expense ratio in 2016 was 82 basis points compared to the average for passive funds, which was nine basis points.
Over the course of 2017 a number of active shops, including BlackRock, AB, Ariel and AllianzGI have taken steps to offer active funds with lower fees for investors.
Not everyone is going lower. Last week, Pimco upped expenses on its $92 billion Pimco Income fund, although it also cut fees on four others.
In May 2016, Goldman got rid of fee waivers on its smart beta exchange-traded funds, replacing them with permanent rates. The Goldman Sachs ActiveBeta US Large Cap Equity ETF had a management fee 0.09% with the fee waiver and was able to keep this management fee under the new structure.
The waiver originally meant that the fee could go up after September 14 2016, when the waiver was set to expire.
But wait, there's more!
Separately, Goldman Sachs has filed for the Goldman Sachs Equal Weight US Large Cap Equity exchange-traded fund (ETF) which has a management fee of only 9bps.
The ETF has lower costs than similar funds from some of its competitors such as Guggenheim Partners, which offers the Guggenheim S&P 500 Equal Weight ETF with a management fee of 20bps.