Fund managers shouldn’t charge management fees
A boutique fund manager is calling upon all investment managers in Australia to move toward a ‘fair' fee model, so they align their interests with their clients.
Co-founder of Harvest Lane Asset Management, Luke Cummings, started an investment fund in 2013 that did not charge management fees, and only relied on performance fees.
"We feel most fund managers don't have their interest aligned with their underlying investors," he said.
Most fund managers charged ‘hefty fees' that exceed the cost of administering the fund, to cover their rent, salaries and insurance etc., with the remainder going to profit and bottom line, Cummings said.
"While that's great for the fund managers, it's not for the investor, particular when returns are low."
Harvest Lane covered all expenses themselves, instead of charging the investor through management fees, he said.
"While it's essentially unheard of in the industry for us to be remunerated based solely on performance, we can't think of a better way to show our investors that our interests are aligned with theirs," Cummings said.
"The only way we get paid is if we perform."
Investors only paid for external fees, which included, administration fees and custody fees.
Notwithstanding that, Harvest Lane operated an absolute return fund, which aimed to produce positive returns in all markets, (10 per cent per annum), regardless of what the stock market was doing.
Recommended for you
The merger with L1 Capital will “inject new life” into Platinum, Morningstar believes, but is unlikely to boost Platinum’s declining funds under management.
More than half of the top 20 most popular shares bought by advised investors during the first half of 2025 were ETFs, according to AUSIEX data.
At least two-thirds of ETF flows are understood to be driven by intermediaries, according to Global X, as net flows into Australian ETFs spike 97 per cent in the first half of 2025.
Inflows for the first half of 2025 for GQG Partners stand at US$8 billion, but the firm has flagged fund underperformance could be a headwind for future flows.
