Callan, a prominent institutional investment consulting firm, has released its 2025 Investment Management Fee Study, marking the 11th iteration of its analysis on the fees institutional investors pay for asset management services. The study provides a comprehensive overview of fee levels and trends across various asset classes and mandate sizes for both active and passive management, spanning 23 asset classes.
The findings reveal crucial insights into the actual fees negotiated by institutional investors compared to the published fee schedules of investment managers. According to Ivan “Butch” Cliff, the study’s author and Callan’s director of research, “We’re seeing continued pressure on actual fees paid for active management, but the pace of fee compression seems to be slowing and may be approaching practical lower limits for quality institutional products in some asset classes.”
Key Findings of the Study
The data, collected from Callan’s proprietary investment manager database, reflects trends from 2024, representing $784 billion in assets under management (AUM) and total fees paid amounting to $1.9 billion. The firm’s fee database encompasses mandates managed by approximately 329 investment firms and 180 institutional investors.
Among the study’s key findings:
- 97% of total fees paid were allocated to active managers, a decrease of 1% from the previous study in 2023.
- 61% of total assets were actively managed, also down 1% from 2023.
- Half of the total active fees were concentrated among just 11% of the investment management firms.
- The highest average basis point fees were charged by hedge fund-of-funds at 113 bps and private real assets at 88 bps.
- Passive U.S. large cap equity fees were the lowest at 1.9 bps, followed by U.S. small cap at 3.1 bps.
- Fee resilience was notably strong for private real assets, hedge fund-of-funds, global ex-U.S. equity, and emerging equity.
- Conversely, fee weakness was observed in core-plus fixed income, U.S. smid/small/macro, high yield/bank loans, and emerging debt.
Additionally, the study noted an increase in passive usage in U.S. smid/small/micro cap equity, which rose by 6% to 29%, and a 2% increase in passive usage for core fixed income, reaching 47%. In contrast, passive usage slightly decreased for both U.S. large cap equity (down 3% to 70%) and global ex-U.S. equity (down 1% to 41%).
Investment Vehicles and Asset Management Trends
Separate accounts emerged as the leading investment vehicle, accounting for 54% of products. Public funds represented the largest share of AUM, holding 34% of mandates and 50% of total assets.
Founded in 1973, Callan has built a reputation as a trusted partner for institutional clients, offering innovative investment solutions supported by proprietary research and data. Today, Callan advises clients with more than $3 trillion in total assets, establishing itself among the largest independent investment consulting firms in the United States. The firm operates six offices across the country, demonstrating its commitment to providing tailored services to a diverse clientele that includes pension plans, endowments, foundations, and independent investment advisers.
For further details, the summary blog post and full study are available on Callan’s official website.
