Columbia Threadneedle has dropped performance fees on £660m worth of UK-domiciled long/short funds ending the charging structure within its £34.7bn Oeic range, Portfolio Adviser can reveal.
The change came into effect from 1 January and covers the extended alpha range, including the Sicav equivalents, plus the Threadneedle UK Absolute Alpha fund.
Each fund has a performance fee rate of 20% multiplied by the excess return. In 2018, the funds only brought in £10,232 of fee revenue, but in 2017 this figure was much higher at £534,610.
All other fees and features of the funds will remain the same with the annual management charge (AMC) on each product remaining 0.75%.
Performance fees have been described as one reason long/short funds suffered net outflows of £8.8bn in the 12 months to September 2019, according to Morningstar data.
Columbia Threadneedle drops Oeic performance fees
| Fund | Managers | AUM | OCF | Performance fee in year ended 31 December 2018 |
| Threadneedle UK Absolute Alpha | Chris Kinder and Mark Westwood | £258.28m | 0.88% | None (2017: £196,501)
|
| Threadneedle American Extended Alpha | Ashish Kochar and Amit Kumar | £74.53m | 0.82% | £10,232 (2017: £Nil) |
| Threadneedle Global Extended Alpha | Neil Robson and Ashish Kochar | £166.71m | 0.82% | None (2017: £338,109) |
| Threadneedle UK Extended Alpha | Chris Kinder | £160.23m | 0.83% | None (2017: £Nil) |
Source: Trustnet/Columbia Threadneedle
Columbia Threadneedle emphasises value for money
In a statement confirming the changes, the asset manager emphasised it was “paramount” that clients attain value for money.
“While all the funds have outperformed their benchmarks over one, three and five years, as active managers we have a duty to demonstrate the value we deliver to our clients,” said Columbia Threadneedle head of UK wholesale Alastair Caw (pictured) in a statement.
“That’s why we are committed to making our fees as transparent and competitive as possible. As part of this commitment we regularly review our fee structures and following a comprehensive review, we decided to remove the performance fees on these funds.”
The fee change coincides with the Financial Conduct Authority requirement for asset managers to now publish value for money assessments within funds’ annual reports. The first assessments are due to be published this month.
A Columbia Threadneedle spokesperson said the fee changes were “not directly connected” to the assessments.
