Lee Robertson, Mark Dampier, Richard Philbin, JB Beckett
The use of performance fees remains an incredibly divisive issue in the fund space. While they may not be used widespread in the retail market space. Some fund groups do nonetheless still link their costs to returns. While others have suggested they may adapt pricing models in the future.
Our Hot Topic discussion, hosted by Lee Robertson. Covered all aspects of fee structures pitted opposing views. From some of most respected names in fund selection.
For Richard Philbin, CIO at Wellian Investment Solutions, performance fees are a great way to “align the interests of the fund, the fund managers, and the investor”.
“I’m not saying it should be 75bps and a performance fee; I’m saying that a performance fee should be brought in at a much lower starting annual management fee”.
However, Mark Dampier, NED and formerly head of research at Hargreaves Lansdown, holds the view that performance fees just “line the pockets” of the fund managers.
“You [the fund manager] are rewarded with an ad valorem fee. Why would I want to pay a performance fee on top? You’re already doing the job so why must I pay you more? It’s a complete con. If a fund manager is so good then why not just have a performance fee then with no other charges?”
JB Beckett, NED and founder of New Fund Order, took a more balanced view though still expressed heavy suspicion around fund groups unduly profiting from performance fees.
“Personally, I like the idea of contingent fees, particularly if they are connected to outcomes, but the reality is that no investor gets to decide what the shape of that performance fee looks like,” he said.
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