The funds will have a lower fixed basis fee of 20bps, comparable to many passive options, but will incur an additional performance fee of up to 20% if they beat their benchmark.
Initially, five active equity funds will be available to UK retail investors in the outperformance share class – Best Styles Global AC Equity, Emerging Markets Equity, Global AC Equity Insights, UK-Mid Cap and UK Opportunities.
Outperformance and underperformance will be monitored daily and added to or subtracted from the fixed basis fee.
At the end of the year, if the fund’s overall performance has been positive, AllianzGI will be paid the total performance fee accrued during the year.
However, if the fund has underperformed its benchmark over one year, clients will only have to pay the fixed fee of 20bps.
Adam Gent (pictured), head of retail and wholesale in Northern Europe, said the “new, low, fixed fee model establishes a new standard for performance fees in the UK” and would appeal to investors who have been put off by high active fees.
“While some clients will still prefer the certainty of accessing our funds through a traditional fixed price fee model, which will still be available, we think this innovative structure will appeal to clients who have been put off active management by having to pay a higher active fee regardless of whether a strategy was outperforming.
“Now, our clients have the choice to pay an outperformance fee only when the fund is outperforming its benchmark, meaning they only pay an active performance fee for delivered, superior performance.”
The trial of its new performance-based share class is expected to go live in early May and if it proves popular with clients AllianzGI has said it will consider rolling out the new pricing model across other funds.
“Investment management is evolving and in response AllianzGI is innovating, leading the industry in introducing new pricing models that meet what clients expect of an active manager,” said Andreas Utermann, the firm’s CEO.
“The launch of this new share class embodies the value shared approach at the heart of our business, with us sharing in the value created only when we deliver the sustained, superior outperformance we aim to generate as an active manager.”
Allianz GI is the latest manager to switch up its fee structure, following increased downward fee pressure from cheaper passive funds.
Fidelity introduced a variable fee model last year in lieu of absorbing external research costs. It made a U-turn on the latter decision in February.
More recently, JP Morgan Asset Management announced it was introducing a variable fee around economies of scale.
Outperformance share class available to UK retail investors
| Fund Name | Base Fee (bps) | Performance Fee | |
| UK Opportunities | 20 | 20% | |
| UK Midcap | 20 | 20% | |
| EM Equity | 30 | 20% | |
| Best Styles Global AC | 20 | 20% | |
| Global AC Equity Insights Global | 20 | 20% |
