Callan’s 2025 study reveals active managers still control the majority of institutional fee pools despite ongoing fee compression, as shifts in asset allocation and ESG trends reshape the landscape.
Active managers continue to shoulder downward fee pressure even as they retain the lion’s share of institutional mandates, according to Callan’s 2025 Investment Management Fee Study and related research from the San Francisco consultancy.
According to Callan’s 2025 Investment Management Fee Study, mandates run by 329 global investment firms for roughly 180 institutional investors, representing US$784 billion in assets under management and US$1.9 billion in fees, show that, while 39% of the assets studied were managed passively, active managers collected 97% of total fees. Hedge fund-of-funds commanded the highest average fees at 113 basis points, and private real assets charged an average of 88 basis points. By contrast, passive U.S. large-cap mandates earned the lowest fees at 1.9 basis points, with U.S. small-cap passive at 3.1 basis points.
Fee softness has been most evident in certain fixed income and smaller-cap equity strategies. Callan noted particular weakness among core-plus fixed income managers and across U.S. small-to-mid, small, micro-cap equity and high-yield/bank loan strategies. “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,” said Callan director of research Ivan ‘Butch’ Cliff in the firm’s report.
The study’s findings sit alongside Callan’s 2025 Cost of Doing Business analysis, which warns that broader shifts in asset allocation are complicating the picture for investors. According to that study, growing allocations to alternatives, where fees tend to be higher, are pushing total fund costs up even as asset owners seek fee savings within traditional asset classes. That dynamic helps explain why active managers remain economically central to many institutional portfolios despite ongoing price competition.
Regional data underlines the scale of manager fees. In the financial year to 2025, Australian superannuation funds spent more than A$1.9 billion on external manager fees, with nearly 60% paid to equity managers. Government statistics published by APRA show equity management fees accounted for around A$1.1 billion, outsourced fixed income managers were paid A$221.1 million, and infrastructure specialists earned A$176.1 million; APRA’s figures do not separately disclose passive versus active mandates.
Callan’s contemporaneous ESG study also adds context to fee dynamics. The 2025 ESG review found a slowdown in firmwide ESG adoption relative to the prior year and persistent gaps in ESG implementation between larger and smaller managers and between U.S.-based and non-U.S. firms. That levelling off of ESG momentum may moderate some of the implementation costs that had been expected to lift manager fees, even as it raises questions about service differentiation among providers.
Taken together, the research portrays a market in transition: active managers continue to dominate fee pools and major mandates, but competitive pressure and shifts in investor allocations are reshaping where fees accrue. Callan’s broader research library and continuing education programmes, including vehicle and alternatives masterclasses scheduled by the firm, reflect an industry grappling with how to reconcile cost control, access to alternatives, and evolving stewardship demands while preserving institutional-quality investment services.
- https://www.financialstandard.com.au/news/active-fund-managers-endure-fee-pressures-dominate-mandates-study-179811246 – Please view link – unable to able to access data
- https://www.callan.com/blog/investment-management-fees-2025/ – Callan’s 2025 Investment Management Fee Study provides an in-depth analysis of fee levels and trends across various asset classes and mandate sizes for both active and passive management. The study encompasses mandates managed by over 300 investment firms for approximately 180 institutional investors, representing $784 billion in assets under management and $1.9 billion in total fees paid. Key findings include that 97% of total fees were paid to active managers, with hedge funds-of-funds charging the highest average fees at 113 basis points, and passive U.S. large-cap managers earning the lowest at 1.9 basis points. The study also highlights fee resilience in private real assets and hedge funds-of-funds, and fee weakness in core-plus fixed income and U.S. small-to-mid, small, micro-cap equity, and high-yield/bank loan strategies. ([callan.com](https://www.callan.com/blog/investment-management-fees-2025/?utm_source=openai))
- https://www.callan.com/blog-archive/2025-cost-of-doing-business/ – The 2025 Cost of Doing Business Study by Callan examines the impact of asset allocation shifts, particularly towards alternatives, on total fund costs. The study reveals that while asset owners strive to lower fees within asset classes, the increasing allocation to alternatives is pushing total fund costs higher for many. It also provides detailed breakdowns by fund type and size, highlighting variations in fee levels across different investor types. ([callan.com](https://www.callan.com/blog-archive/2025-cost-of-doing-business/?utm_source=openai))
- https://www.callan.com/blog/2025-esg-study/ – Callan’s 2025 ESG Study assesses the momentum behind environmental, social, and governance (ESG) efforts among investment managers. The study indicates a slowdown in ESG initiatives compared to the previous year, with fewer firms reporting a firmwide ESG policy and a general levelling off or decline in other ESG-related practices. It also highlights persistent gaps between larger and smaller managers, as well as between U.S.-based and non-U.S. firms in ESG adoption. ([callan.com](https://www.callan.com/blog/2025-esg-study/?utm_source=openai))
- https://www.callan.com/events/november2025_masterclass/ – The 2025 Investment Vehicle Masterclass, hosted by Callan, focuses on the current landscape and implementation considerations of investment vehicles. The masterclass covers topics such as the rise of collective investment trusts, the democratization of private market assets, and the implications of tokenization for a digital future. It is designed for investment professionals seeking to deepen their understanding of investment vehicles. ([callan.com](https://www.callan.com/events/november2025_masterclass/?utm_source=openai))
- https://www.callan.com/events/2026-alternatives-investments-masterclass/ – Callan’s 2026 Alternatives Investments Masterclass is an educational program aimed at investment management professionals. The masterclass provides insights into alternative investment strategies, focusing on perspectives, critical knowledge, and details essential for success in the alternatives investment space. The program is open exclusively to investment management professionals and is designed to enhance understanding of alternative investments. ([callan.com](https://www.callan.com/events/2026-alternatives-investments-masterclass/?utm_source=openai))
- https://www.callan.com/research-library/ – Callan’s Research Library offers a comprehensive collection of research materials, including studies, reports, and analyses on various investment topics. The library provides access to resources such as the Periodic Table of Investment Returns, monthly updates on investment returns, and other research publications covering a wide range of asset classes and investment strategies. It serves as a valuable resource for investment professionals seeking in-depth information and insights. ([callan.com](https://www.callan.com/research-library/?utm_source=openai))
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on January 19, 2026, and references Callan’s 2025 Investment Management Fee Study, which was released on January 13, 2026. ([callan.com](https://www.callan.com/blog/investment-management-fees-2025/?utm_source=openai)) The study is recent, and the article provides timely coverage. However, the Financial Standard article is the only source found reporting on this study, raising concerns about the originality and independence of the reporting.
Quotes check
Score:
6
Notes:
The article includes direct quotes attributed to Callan’s director of research, Ivan ‘Butch’ Cliff. ([callan.com](https://www.callan.com/blog/investment-management-fees-2025/?utm_source=openai)) However, these quotes are not independently verifiable from other sources, which raises concerns about their authenticity and potential reuse from the original press release.
Source reliability
Score:
7
Notes:
The Financial Standard is a reputable Australian financial news outlet. However, the article relies solely on Callan’s press release and does not include independent verification or additional sources, which limits its reliability.
Plausability check
Score:
8
Notes:
The claims about fee pressures on active fund managers and their dominance in mandates are plausible and align with industry trends. However, the lack of independent verification and reliance on a single source diminishes the overall credibility.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article provides timely coverage of Callan’s 2025 Investment Management Fee Study but relies solely on Callan’s press release without independent verification or additional sources. This lack of source independence and verification raises significant concerns about the article’s credibility and reliability.