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Broker talkback

Do you think it is acceptable for fund managers to charge a premium for consistently outperforming funds?
Yes 38%
No 62%

No “Charging a premium is usually a one-way street, in that if a fund performs, they raise the fee but if it fails over a period – as most inevitably do – the lower charge will not be reinstated.”

Paul Duckworth IFA owner Paul Duckworth

No “I do not think it is fair and it makes it more difficult for us to explain the charges to clients.”

Diane Needham, Chessman & Partners

Yes “If they are making money, they are obviously doing something right. But if the fund does not outperform, you should get your money back. I think charges should be performance-related.”

Alan Hewitt, McSherry Halliday

Yes “Absolutely. You would expect to pay a lot more for a Mercedes than for a Ford Fiesta so why wouldn’t you do the same on those funds which consistently outperform the market? The problem arises when they charge customers retrospectively.”

Paul Campion, The Financial Management Group

Yes “People are generally happy to pay a little bit extra for funds that consistently outperform.”

Arun Saili, Aaron Knight Saili and Associates Limited

Yes “If they can justify performance, I would be happy to pay a slightly higher annual management charge.”

Kevin Bailey, Wessex Investment Management

No “They should consider if they do not consistently outperform in the first place, what are they charging investors for anyway?”

Christopher Padley, Cheshire Investments & Pensions

Yes “If they outperform, then it seems logical because it gets better returns for clients.”

John Horrocks, Compass Assurance Services


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