Over the next decade, tens of thousands of financial advisors and millions of their clients will experience the benefits of alternative investments for the first time.
Since 2009, CAIS has been at the forefront of making alternative investments more accessible to advisors by solving challenges such as access to quality funds, education on strategies, trusted due diligence and reporting, and operational efficiency.
Today we are working to solve another challenge: industry-wide fees and expenses that are significantly impacting end-investor portfolio performance. The “total cost” of alternatives to end-investors, which include fees from asset managers, custodians, reporting firms, alts platforms, wealth management firms, and advisors, must be considered if we are to truly democratize alternative investments.
CAIS’ modern technology has already made great strides in making investing in alternatives more cost effective for advisors and their clients. Our latest initiative focuses on reducing fees and expenses associated with custom feeder funds.
Why Do Wealth Firms Use Feeder Funds?
Feeder funds are a valuable utility for wealth management firms, enabling the efficient creation of internal single or multi-manager access vehicles while streamlining back-office operations. Many wealth management firms outsource the formation and ongoing management of custom feeder funds to third-party firms that charge additional fees and often opaque expenses.
Read our white paper to learn more about the benefits of customizing your own feeder fund.
How CAIS Is Leading the Way
Due to recent advancements in our technology, CAIS can now offer our wealth management clients this important feeder fund service with reduced costs and enhanced transparency. Moving forward, CAIS will only charge a technology fee, as low as 5 basis points, depending on feeder fund AUM and complexity. This reduced fee reflects our operating costs and aligns with other third-party service providers needed to support these investment vehicles, such as administrators, custodians, and auditors.
In addition, CAIS will provide detailed transparency on all feeder fund fees and expenses, empowering advisors to understand the total cost impacting end-client portfolio performance. Our goal, with your support, is to establish a new industry-standard for feeder fund fees and transparency, and if adopted broadly, this change in fees could save end investors hundreds of millions, if not billions, per annum in unnecessary fees and expenses.
What It Means for You
When it comes to custom feeder funds, there are two key actions your firm should take:
Assess the total cost of your current feeder funds to understand if your end clients are receiving fund performance with the least amount of fee dilution possible.
If you currently work with other platforms that charge additional fees and expenses for feeder funds, we welcome you to compare our new fee and transparency approach with your existing provider. Contact us to learn more.
The Bottom Line
Our goal, with the support of the advisor and asset manager community, is to establish a new industry standard for custom feeder fund fees and transparency. Together, we can lead the industry towards a future where lower fees translate into better outcomes for all investors.
