Fee compression at a European asset manager
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The prompt
A European asset manager has EUR 100 billion of AUM: EUR 60 billion in active equity funds at a fee of 0.60 percent a year and EUR 40 billion in passive funds at 0.10 percent. Costs are EUR 260 million a year. Next year, EUR 6 billion moves from its active funds to its passive funds, and separately markets add EUR 8 billion and net flows add EUR 3 billion to AUM. What are revenue, the average fee, and the margin today, and how much revenue does the mix shift cost?
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