BT drops fees under pressure from van Eyk

BT Funds Management has dropped the fees on its flagship BT Australian Share Fund under threat of a sell rating from the van Eyk Research group.

The fund manager, bought by the Westpac Bank in August, will pay back to investors one-third of the ongoing management fee it earns from the fund between November 1, 2002 and April 30, 2003.

The move represents a 50 basis point fee reduction for the fund’s investors over the six-month period.

The measure was agreed to at a series of meetings between BT and van Eyk last week, where van Eyk managing director Stephen van Eyk warned the consequences for BT could be substantial if the research house was to give the fund a sell rating.

“With this [measure] it is highly unlikely that investors will lose if they stay in the fund … although I am not sure that 0.5 per cent is going to bring new investors into the fund,” van Eyk says.

The dramatic step by BT comes as the first figures are beginning to emerge about the extent of the outflow from the group since its acquisition by Westpac.

The head of the group’s asset accumulation division, Rob Coombe, says BT’s Australian equities funds have been losing between $5-$8 million a day since the Westpac buyout.

Van Eyk says the fee reduction will cost BT somewhere in the order of $3 million over six months.

BT will make the payments back to investors in two quarterly instalments at the end of January and April next year.

“I told BT if they did something meaningful they may be able to turn around industry opinion or at least stop the outflows,” van Eyk says.