Macquarie Incentive Series to charge for outperformance only
Bruce Murphy
Macquarie Funds Management has launched a set of funds, called the Incentive Series, comprising a single fee for outperformance of the respective benchmarks with no other forms of remuneration.
Clients investing in the Incentive Series will not pay any ongoing management fees, custody fees, entry fees, or exit fees, instead being charged a fee totalling 35 per cent of the outperformance over the fund’s benchmark.
However, the fee will not be levied unless the return on the fund is positive and has surpassed the previous highest level of outperformance.
Macquarie Funds Management head of distribution Bruce Murphy said the main drivers behind the formulation of the Incentive Series were to provide investors with a set of managed funds that did not hug the benchmark and did not charge fees for underperformance and negative returns.
The first two funds to be included in the new offering are the Macquarie High Conviction Incentives Fund and the Macquarie Australian Small Companies Incentives Fund.
“We’re trying to create funds here with the Incentive Series that contain a pricing structure allowing investors to share both the risks and the rewards of investing in equity funds with the manager,” he said.
“In a negative year normally the fees would exacerbate the loss investors have to bear, whereas in this structure you’re not adding any extra loss on top of the loss you’re already bearing, so there’s a bit of an insurance element to it,” Macquarie Funds Management co-head small companies Neil Carter explained.
“We believe this series is a very significant innovation and really changes the landscape for retail investors where we are both sharing now the risk and reward in that funds management space,” Murphy said.
Members of the public can currently invest in the Incentive Series with a minimum amount of $20,000 directly through the product disclosure statement. It is intended that the new series will be included on all of the major master trusts and wrap platforms in the coming months.
AUTHOR
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
