At the same time, the threshold for the tiered 0.50% investment management fee to kick in will rise from £50m to £750m, which is most of the company’s current gross assets less liabilities of £786.7m. Fees on the first £750m of assets will be charged 0.60%. Blackrock used to charge investors 0.65% on the first £50m assets.
Despite the changes to the tiered fees, the board of Blackrock Smaller Companies said the changes would have resulted in total fees to the manager dropping around 20% (£1.1m) if they had been applied to the one-year period ending 28 February 2018. The total operating charges ratio, including performance fees, would have been reduced from 0.93% to 0.77%.
A regulatory filing said: “The board is of the view that these changes are appropriate given the substantial increase in size of the company since such fees were last agreed.
“In addition, they are consistent with trends in fees which are being seen across much of the investment trust sector and will make the company even more competitive within the UK Smaller Companies subsector. The board also sees merit in the simplicity and transparency of the new fee arrangements.”
The performance fee was based on 10% excess over the benchmark, Numis ex Investment Companies + Aim Index, for the previous two years and was capped at 0.25% of the average total assets less current liabilities. The performance fee was capped every year in the investment trust, which is top quartile over one, three and five years.
The investment trust has returned investors 21.3% over one year and 74.1% over three years compared to 11.5% and 53.1% respectively in the IT UK Smaller Companies sector.
In February, Blackrock announced Prentis would step aside on the Throgmorton fund, where he was co-manager with Dan Whitestone, to focus on the Smaller Companies investment trust.
A portfolio update from the investment trust, also published on Tuesday, said zero exposure to Conviviality, which went into administration this month, helped deliver outperformance compared to the benchmark. Prentis’s former portfolio, Throgmorton, shorted the stock, which was that investment trust’s largest contribution to performance in March.
