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Fee compression at a European asset manager
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?
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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