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Performance fees boost managers' earnings

Performance fees have helped to lift the fee revenue claimed by fund managers Milford and Fisher Funds.

Wednesday, August 2nd 2017, 5:59AM 1 Comment

Companies Office figures show Milford reported fee revenue of $46.5 million for the year to March.

That is up 21% on the previous year.

Of that, $35.1m was management fees and $11.4m performance fees.

Milford has near $4 billion in retail funds, with more than $800m in its KiwiSaver funds. 

For the same period, Fisher had fee revenue of $69.1m, up 3%.

That was made up of $60.8m in management fees and $3.3m in performance fees, which was a drop compared to the year before.

Carmel and Hugh Fisher, founders of Fisher Funds, were named on this year's NBR Rich List, with wealth of $55 million.

Fisher Funds is now the country's fifth-largest fund manager, with more than 255,000 clients and $7 billion under management.

Fisher stepped down from her role as managing director last year.

Tags: Fisher Funds funds management KiwiSaver Milford Asset Management Performance fees

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Comments from our readers

On 2 August 2017 at 8:43 am Brent Sheather said:
Fortunately performance fees are in the sights of the FCA in the UK and this might embarrass the FMA into doing something constructive locally. Whilst Milford and Fisher Funds performance fees, in my view, aren’t attractive to retail investors there are even more disadvantageous structures around, in my view. Have a look at Pie Funds – they just charge a flat 15% or so of returns with no benchmark at all. Last year one of their funds incurred total expenses of 4.9%. The Gordon Growth Model says, as I am sure all AFA’s with their CPD up to date know, that r = D + G. If we substitute Pie Funds numbers into this equation we get:
r = D + G
r = zero plus 0.85 x 6 = 5.1% (assumptions are dividends totally consumed by operating costs and dividend growth of 6.0% pa versus 4.0% pa for large cap equities).

Doing the same numbers for a Vanguard index fund investing in large cap stocks gives you a return of about 7.3%. Comparing the two, the Pie Funds option gives you the risk of small cap with a return less than large cap. Hardly compelling is it, yet there is $120 odd million in that fund.

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