High price to pay for decent performance

Article Abstract:

The United Kingdom Securities and Investments Board is considering performance-related fees for unit trusts, but there are potential drawbacks. Fees may be increased for passing easy benchmarks, and normal fees may be charged for underperformance. Fund managers could be penalised when there is a downturn in the market, and rewarded for an upturn, though general market movements do not relate to performance of individual managers. Newton Investment Management is one manager that uses performance-related fees and has overcome many of these problems, but wider changes are not likely before 1998.

Management, Benchmarks, Benchmarking

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Capital sleight

Article Abstract:

UK investment trust and unit trust companies are divided on whether management fees should be charged against capital. The investment trust industry will have guidelines from a committee. The guidelines will offer the option of charging fees against income, or charging some of the fees against income and some against capital in relation to long run returns from each source. Some investment trust managers argue against charging fees to capital due to the capital erosion that this can cause.

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The traumas of Pep transfers

Article Abstract:

UK investors seeking to transfer personal equity plans (Peps) to a new manager may do this without the move affecting their allowance. Transfers may be called for if the investment performance of a Pep is poor. Some managers take a long time to carry out transfers, and delays of months have occurred. Exit fees are charged by some companies such as Tower Fund Managers. Many companies do not charge for transfers, and customers can gahhle.

United Kingdom, Personal finance

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