Asset managers could rep-lace annual management charges with performance fees as a trade-off for access to multi-ties, says Investec managing director Andy Sowerby.
Sowerby, joint MD of Investec Fund Managers, says firms are almost ready to make the switch to performance fees.
Hedge fund managers are frequently remunerated based on performance. It is only since FSA rules were implemented that performance-related fees in the retail market have been allowed.
Gartmore offers performance-related fees on its focus fund range while Threadneedle will implement them in its Ucits 3 UK limited-issue fund in the new year if the proposals are approved by the FSA.
This will mean that inv-estors will be charged 0.75 per cent if the fund underperforms the FTSE and 1.75 per cent if it outperforms.
Sowerby says: “This is something that has been around in hedge funds for some time and is slowly moving across to the retail market. Now that the rules have changed, managers can be rewarded for excellent performance.
“I would not be surprised if a lot of firms are doing their research into what the effects of changing their charging structure would be – this could be the payoff for getting onto a multitie panel.”