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Upping the ante

First State Investments has reignited the on-going debate over charges this week after the fund house announced proposals to raise the annual management charge on its £877m Asia Pacific and £183m Greater China growth portfolios from 1.5 to 1.75 per cent.

A number of firms have come under fire for taking the decision to up their fees, with capacity issues or a need to move in line with the market the usual rationale for the decision.

In this case, there is no exception as First State chief executive officer Charlie Metcalfe explains. He says: “We feel it is appropriate charging a premium fee on high quality funds that have limited capacity.”

The former part of Metcalfe¹s statement does hold water when you look at the performance of both funds, with Asia Pacific building a big adviser following under the management of Angus Tulloch. It has produced annualised returns of 15.54 per cent since launch although it is now soft-closed.

Meanwhile, the Greater China fund, which is managed by Martin Lau and Ho Hsui Mei, has produced a 28.61 per cent annualised return since its launch in December 2003.

However, some advisers are disappointed by the move, claiming that because the vehicles are fairly niche, firms can overstep the mark to claim extra funds in the knowledge that investors may not move due to the limited alternatives.

Hargreaves Lansdown senior adviser Ben Yearsley says: “They are taking in some £2.65m extra a year through the two funds in the knowledge that people will not be voting with their feet. I would be interested to see whether the Greater China fund is likely to close in the near future given the capacity issue raised.”

Elsewhere, it also appears to be a case of second time lucky for Premier Asset Management this week, after the group¹s senior management team announced through bidding vehicle Harvard Bidco, that the management buy out offer has now gone wholly unconditional.

After meeting opposition from a number of shareholders, the group managed to attain over 53 per cent shareholder approval by the second deadline on August 24, with the Harvard Bidco either acquiring, or receiving irrevocable assurances that it will acquire the best part of a further 25 per cent.

All this means that the group will now have a total of 78.22 per cent of shareholders supporting the move and has made a final offer to the remaining shareholders before the deadline on September 11.

Premier chief executive Mike O¹Shea says: “Despite the opposition we have had the offer has gone unconditional and we will look de-list from the AIM market.

“This is great news as we can move to bring this business forward in a number of directions.”


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