Orbis would like revised charges to sync more closely with the periods that the funds beat the benchmark
Under the new Orbis structure, fees will be charged or refunded weekly. Picture: 123RF/ANDRII YALANSKYI
Investors in Allan Gray’s Orbis Global Equity Feeder and the Allan Gray Orbis Global Fund of Funds will also be affected by the new fees and fees on offshore allocations in the Allan Gray Equity, Stable and Balanced Funds will be adjusted. Orbis’s revised fees are very complex and I doubt any ordinary investor will figure out what they will pay because of the fee reserve.In its proposed fee structure, Orbis plans to reduce the base fee it will charge regardless of how the fund performs, but the additional fee based on performance will no longer be capped. This means investors could pay higher fees than before when the Orbis portfolios outperform.
However, over shorter periods like 10 years, the fee is lower at 1.2% a year as opposed to 1.9% a year, and over the past three years it would have been 1.4% a year as opposed to 1.8%. The fact that the fee is no longer capped on all but the SA multi-asset funds introduces uncertainty about what you will pay, Kruger says, and he does not think the net impact will be a reduced fee.
In the past, periods of underperformance have typically been followed by strong outperformance, the manager’s data shows. Coronation, for example, has introduced fixed fees on its US-denominated Global Emerging Markets Fund, its Global Equity Select Fund and its rand-denominated feeder fund. Coronation was charging clients using an investment platform to put money into the global equity fund a base fee of 0.65%, and the performance fee ranged from 0.3% to 1.9%. The new fee is fixed at 0.85%.
When funds deliver good performance, it is human nature to pay less attention to the higher performance fee, but uncapped fees should be assessed to ensure they are fair under all potential performance scenarios, he says. Performance fees typically start with a base fee that applies when the manager delivers returns in line with its investment benchmark. Orbis hopes to reduce this fee from 1.5% a year to 1.1% .
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
WATCH: Who is Poppie Nongena?Clementine Mosimane gives a heartbreakingly beautiful performance in the gripping new local film, Poppie Nongena.
Read more »
Business veteran Allan Gray dead at 81South African business magnate and founder of the eponymous asset manager, Allan Gray (81), has died.
Read more »
UPDATE: Baboon spotted on Sandton hotel's roofA baboon has been spotted looking for a new troop in Northern Johannesburg.
Read more »
What consumers look for on Black FridayAmid a depressing economy, South Africa consumers will be searching for the “best deal” come 29 November.
Read more »
Why transformation in the car industry is good for businessThe wise and consider intervention of the Automotive Industry Transformation Fund comes at a critical time
Read more »
'Thank you, South Africa', says KFC couple as they prepare for second weddingSouth Africa’s favourite couple has spoken out for the first time since their proposal video at fast food outlet KFC went viral.
Read more »