The last couple of weeks saw various players enter the fray surrounding investment fees and in particular performance fees. This followed a video that went viral after it aired on Biznews where London fund manager, Sean Peche, criticised local managers for unfair practices as far as how and when performance fees were charged. Reference was made that local fund managers are ripping SA investors off, and even more so the ones who are charging performance fees.
Before I start, I just want to point out that all costs in SA unit trusts are paid out of the fund management fees. Global funds indicate fund manager fees which exclude trading cost, administration etc. UK funds also do not charge VAT which SA funds do. All the periphery costs are borne by the investor separately.
It is therefore crucial to consider the TER and/or TIC in conjunction with historical returns to determine how a particular fund fared against its peers over different periods. Once again, past performance has no bearing on future returns. However, a historical track record does indicate a trend, but many factors need to be considered.
Let’s start by asking why performance fees. It’s a choice fund managers make. They can elect to include performance fees or not. The trend has been to move away from performance fees over the last decade. The general explanation by those who charge performance fees is that they want to be rewarded for outperformance but at the same time they want to compensate investors when they underperform. Properly constructed performance fees do exactly that.
thisiswealthup Greatest trader of all time JamesAlderson0 I never believe it until I experience it For a start i deposited R50,000 to test the waters in 7 days I got a return of R500,000, he's diligence and honesty is undeniable. Thank you once again JamesAlderson0
thisiswealthup Greatest trader of all time JamesAlderson0 I never believe it until I experience it For a start i deposited R50,000 to test the waters in 7 days I got a return of R500,000, he's diligence and honesty is undeniable. Thank you once again JamesAlderson0