Hargreaves Lansdown investment manager Ben Yearsley has criticised Schroders for the performance fee structure it has introduced on its Sloane Robinson emerging markets fund.
He says that an annual fee of 2 per cent plus a 20 per cent performance fee over US Libor is “simply too expensive”. He says: “I think the performance fee is outrageous. How anyone could think using US Libor is a fair benchmark for an emerging market fund I really do not know.”
The Schroder Sloane Robinson emerging market fund was launched in June and sits within its Luxemburg-domiciled GAIA hedge fund platform.
Sloane Robinson is a privately held long/short equity manager focusing on emerging markets.
Last week, Hargreaves Lansdown chief executive Peter Hargreaves called for advisers to boycott funds which use performance fees, except in exceptional circumstances.
A Schroders spokeswoman says: “Where a fund has an objective to outperform a market index it makes sense to use the same market index for performance fee purposes. However, where a fund is unconstrained by a particular benchmark, like Schroder GAIA Sloane Robinson emerging markets fund, and aims to deliver absolute returns over the medium to long term while offering downside protection, other approaches make more sense, that is, performance fees on positive returns or outperformance over a hurdle, such as Libor.”