Two-thirds of fund companies expect to see increased use of controversial performance fees in 2011, according to Skandia Investment Group research.
It says providers expect further use of the fees across a range of asset classes next year, with 65 per cent expecting greater use in equity funds and 50 per cent expecting more absolute return funds to use the fees. This comes despite the fact several intermediaries have recently attacked the increased use of such fees. Skandia says respondents are expecting increasing competition in annual charges from low-cost players such as ETF providers.
Hargreaves Lansdown senior analyst Meera Patel says: “Fund groups are going to have a hard job justifying adding performance fees to us. We will not be quick to recommend a fund just because they think they can whack on a performance fee to make it sound special.”