Allianz launches ‘outperformance’ fee

Allianz Global Investors has launched a performance fee structure on five of its UK funds in response to the competition with passive providers and an increasing transparency clampdown.

The ‘outperformance fee’ share class will charge a fixed fee of 20 basis points and a performance fee of 20 per cent that will apply only if the fund beats its benchmark.

If the fund’s overall performance has been positive, at the end of the year the company will be paid the total performance fee accrued during the period.

If the fund undeperforms, the performance will be recorded on a daily basis and reduce the charge. But if the fund underperforms the benchmark overall at the end of the year, clients will only pay the fixed 20bps.

There will be no additional costs other than the 20bps on the fund, while the maximum period of underperformance of the fund is set at 5 years.

The UK active funds with the share class using the new fee structure will be:

  • Allianz Best Styles Global AC Equity
  • Allianz Emerging Markets Equity
  • Allianz Global AC Equity Insights
  • Allianz UK-Mid Cap
  • Allianz UK Opportunities

Allianz GI, which manages €498bn (£433.5bn) globally, already applies a performance fee with a “fulcrum” structure on three of its US funds. The asset manager is currently holding discussions with US regulators to introduce the new outperformance fee to other US funds.

Leap of faith: Will performance fees restore trust in active managers?

The company said it took six years to work on the new pricing model which included various consultations with the FCA to agree to the model.

Speaking at a press conference, Allianz GI chief executive and chief investment officer Andreas Utermann, who has been at the helm of the firm since 2015, said the FCA was eventually “pleased” with the new model and said the regulator was “comfortable” with the final decision.

Utermann said the FCA wanted to make sure the fund objectives were aligned with the new fee structure.

“This is the clarity the FCA has been looking for [in the asset management industry],” Utermann said, referring to the regulator’s damning review of the sector.

He added: “A lot of people said with [the performance fee] there is a risk of cannibalism. There are two triggers for launching a performance fee; you realise that somebody is eating your lunch and you also realise that the active industry is stuck to a pricing model which is not responding to what clients want.”

Architas investment director Adrian Lowcock says the new model looks like “a classic performance fee” but is only in line with what most clients would expect.

He says: “It is good to see these innovations, but is it just making this more complicated for investors? It seems quite hard to explain to investors. If you charge performance fees to beat the benchmark, that is your job so it feels like you are charging a fee to do your job. I would rather expect a fee to come in with an additional outperformance [level].”

In October, Fidelity International said it will introduce a fulcrum fee whereby the manager will charge a higher fee when it delivers outperformance net of fees, but will be lower if performance meets or is below the benchmark.

US manager AllianceBernstein also plans to roll out a new performance-linked fee structure in Europe, according to reports.


Allianz Global Investors acquires £24bn bond fund manager

Allianz Global Investors has acquired bond fund manager Rogge Global Partners for an undisclosed sum. Following the deal, which is subject to regulatory approval, RGP, which has £24.1bn of funds under management, will maintain its investment team and process. Allianz will acquire 100 per cent of the issued share capital in RGP from Old Mutual […]


Allianz Global Investors CEO steps down in reshuffle

Allianz Global Investors chief executive Elizabeth Corley is to step down from her role to take on a non-executive position as vice chair at the firm. Current chief investment officer and co-head of the firm Andreas Utermann will split responsibility for Corley’s role as chief executive and co-head of Allianz GI with George McKay, Allianz GI’s acting […]


Allianz Global Investors hits out at rogue investment bankers

Allianz Global Investors global chief executive Elizabeth Corley has lashed out at investment bankers claiming that too many do not care about unscrupulous behaviour, The Telegraph reports. Corley, who also heads the new Fixed Income Market Standards Board, which was set up by the Bank of England in a bid to get the City to […]


What does UK election result mean for sterling and mid caps?

Mark Martin, head of UK Equities at Neptune, comments on the Neptune UK Mid Cap fund’s positioning and the opportunities presented by a weak sterling. Read more: Brazil UK M&A boom UK election and mid caps   Important information – for professional investors only Investment risks Neptune funds may have a high historic volatility rating and […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment