Brevan Howard has proposed amending the investment policy of its £388 million BH Global fund to reduce its costs.
BH Global currently invests in other Brevan Howard strategies, incurring fees on each as well as base ongoing charges of 0.75% at the trust level. The present structure is:
|BH Global – Current Fees on Underlying Funds|
|Management Fee||Performance Fee||Allocation % of net assets|
|BH Credit Value||1.00%||15%||2.4|
|BH Credit Catalysts||2.00%||20%||15.4|
|BH Systematic Trading||1.00%||12%||7.5|
|BH Commodities Strategies||2.00%||20%||6.1|
|BH – Emg Mkts Local Fixed Income||1.00%||20%||3.2|
|BH Emerging Markets Strategies||2.50%||20%||0.2|
|Sources: Brevan Howard; Numis. Allocation at 28 February 2014. An additional management fee of 0.5% is charged by BH Global.|
Under the new policy, BH Global will instead invest directly in the open-ended £2.6 billion Brevan Howard Multi-Strategy Master fund.
This will not change the trust’s management, but will mean its assets no longer incur the same underlying fees.
According to Brevan Howard, this would change the trust’s aggregate costs to a 2% management fee and a performance fee of 20%.
Ewan Lovett-Turner, an analyst at Numis, observed that the previous fee structure had possibly deterred some investors. ‘We believe this had been one of the factors contributing to the persistent discount which has averaged 10% over the last year, and is currently 8.7%,’ he said.
Over the past three years BH Global has returned 13.3%, compared with a 27.7% rise by the FTSE World index.