Another day, another complaint about “arrogant” hedge funds charging unfair fees.  This one was from a UK pension fund head to a conference in London.  According to Reuters, Philip Read, the chairman of the British Coal Staff Superannuation Scheme told the audience “If they want money from us they will have to offer … alignment of interests. If hedge funds remain arrogant and not humble, I think money will go elsewhere…”

Read went on to say that he and other pension funds will “gang up” on hedge funds if they don’t eat some humble pie – and quick.

His comments were representative of the love/hate relationship institutional investors have with hedge funds.  They threaten to “go elsewhere,” yet make great efforts to stick around and force changes.

But hedge funds aren’t the only ones being attacked for allegedly exorbitant fees.   It looks like the mutual fund industry is about to undergo another series of attacks.  As Investment News reports, one mutual fund company is being dragged all the way to the U.S. Supreme Court to defend its fee structure.

A couple of individual investors are suing Harris Associates for excessive advisory fees charged to the Oakmark Series of mutual funds.  Rather than complaining about the cost of the funds themselves (a pretty reasonable 1.1% according to Oakmark’s website), they are taking issue with the fees paid by the Oakmark funds (which were created by Harris) to the fund Advisor (Harris itself).

As the Cornell University Law School’s Legal Information Institute (LII)  reports, the advisory fees paid by Oakmark to Harris would range from 1% per annum to 0.75% per annum depending on the eventual size of the fund.   Oddly, Harris was only able to charge 0.75% to 0.35% to arm’s length clients (funds it did not create) such as pension funds or other mutual funds.  (By comparison, eVestment Alliance’s annual fee survey says the average fee for large cap mandates ranges from 60bps to 50bps.)

As the Cornell LII warns: More…