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Allianz cuts tech trust fees after huge 2013 payout
by Robert St George on Mar 06, 2014 at 09:58
The RCM Technology Trust has lowered both its annual management charge and its performance fee.
The £147 million fund, managed by Allianz, has cut its annual charge from 1% to 0.8% and its performance fee from 20% of outperformance to 12.5%, capped at 2.25% of net assets.
‘These new arrangements continue to give substantial incentives to the manager but are more closely in line with current practice in the investment trust market,’ said chairman David Quysner.
In RCM’s most recent financial year, ended 30 November 2013, Allianz earned a performance fee worth £6.1 million – equivalent to 4.6% of net assets.
During the period RCM, managed by Walter Price (pictured), returned 47.2% on a net asset value basis while its benchmark Dow Jones World Technology index rose by 20.5%.
‘The reduction in fees is positive for investors,’ commented Charles Cade, head of investment companies research at Numis Securities.
‘There has been an increasing trend of simplifying fee structures, demonstrated by the removal of performance fees by 13 funds since the start of 2013.
'We do not believe that all investment companies should necessarily remove performance fees. Indeed, there is an inherent appeal that managers are able to share in the upside so long as there is compensation in terms of a lower base fee,’ Cade added.
‘The key is for incentive fees to be carefully constructed to ensure that they do not simply reward luck or encourage managers to take excessive risks.
'This includes the selection of an appropriate benchmark, the inclusion of caps and high watermarks, and considering appropriate measurement periods.’
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on Aug 01, 2014 at 12:55