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2013 Business Expense Benchmark Survey
The largest European firms with greater than $10.0
billion AUM also showed operations and technology
costs that were 21% higher than their U.S. competitors.
This, however, was due to headcount. Total operations
and technology headcount at the largest European
firms averaged 135.2 heads versus only 73.7 heads in
the U.S. As a result, compensation-related expenditures
on operations and technology for these large European
firms were 8 basis points versus only 4 basis points at
similarly sized U.S. hedge funds.
While noticeable, these differences are not nearly
as great as those due to marketing costs. Chart 27
shows little differentiation in the pattern of spending
on operations and technology between the two
regions. Indeed, although the absolute basis point
spend by European firms might have been higher in
this category, the percentage of total management
company spend is lower in Europe than for similarly
sized U.S. firms in nearly all instances.
The remaining management company costs reported
by our European versus our U.S. survey respondents
showed amixed bag. Risk and compliance and business
management costs were higher at some AUM levels
in Europe and lower in others. The same held true
for business management. On the whole, however,
the pattern of European firms registering higher
management company expenses (ex-investment
management) proved out. The average management
company spending for the 35 European firms was
$15.8 million versus only $14.6 million across the 68
U.S. firms in our sample. This equates to an overall
premium of 8.0% in terms of costs.
Chart 25: European vs. U.S. Marketing Costs as Percentage of Management Company Costs
(Excluding Investment Management)
$100M
$500M
$1.5B
$5B
$10B
>$10B
20%
25%
30%
35%
Source: Citi Prime Finance. EMEA data set reflects 35 firms with total AUM of $168.5 billion. U.S. data set reflects 68 with total AUM of $288 billion
10%
15%
PERCENT OF TOTAL MANAGEMENT COMPANY COSTS
Europe
U.S.