Performance fees under scrutiny at adviser conference
SA asset managers have to think differently about their performance fees to encourage fairness, transparency and reduce complexity, industry experts say.
SA asset managers have to think differently about their performance fees to encourage fairness, transparency and reduce complexity, industry experts say. Speaking at Morningstar’s annual adviser conference, Nedgroup Investments MD Nic Andrew said funds should start earning performance fees once they get to the highest mark so investors would not have to pay for performance they did not receive. “We aren’t saying performance fees are bad. They are fine as long as they are fair and simple. Generally we find that they increase complexity, so that’s why we only have them on low-risk funds where fees can be lowered when there is a low-return environment,” he said. Andrew said Nedgroup only charges performance fees on two of its low-risk funds and such fees are capped at 10% of the fund’s performance. If the fund underperforms the performance fee becomes zero.
The asset management companies had a hard time fielding questions from advisers about why investment performance fees in eme...