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BlackRock has claimed there is a trend among UK retail funds towards performance fees, following its announcement of a performance fee for its soon-to-launch Global Tactical Asset Allocation fund.

Tony Stenning, managing director of UK retail, said the nature of the fee had yet to be determined. But he said this type of charge was acceptable if clients understood and agreed with the rationale behind it.

“Performance fees are in their infancy,” he said. “There is undeniably a trend towards them, but it depends how you get there. You’re not going to change attitudes in the marketplace overnight.”

Although BlackRock had no plans to introduce performance fees on its long-only funds, Mr Stenning said it was a growing theme for retail managers seeking investment returns that are uncorrelated to the market.

“You are giving them an incentive to exceed the performance hurdle,” he said. “It’s undeniably more expensive to run one of these types of fund, but that’s not the complete picture.”

BlackRock already has a performance fee on its £950m UK Absolute Alpha fund, which uses long/short strategies to deliver uncorrelated returns. Mark Lyttleton, who co-manages the fund, said strong performance was getting harder to find in the retail world and performance fees were one means of incentivising it.

Performance fees were partly suitable for the fund because “to a degree” managers wanted compensation for the effort of running it. “It’s a lot of work running a fund like this,” Mr Lyttleton said.

But Mr Stenning confirmed the performance fees on BlackRock’s retail funds were not an attempt to prevent managers moving full time into hedge funds, whose performance fees are higher.

“We’re not trying to compete with the hedge fund world, which is highly leveraged, non-transparent, and does not have daily dealing,” he said.

Mark Tyndall, chief executive of Artemis Investment Management, agreed the stability of the retail industry helped steer his staff away from their hedge fund peers.

“From the staff and employment point of view, it’s not been an issue. It’s a very stable long-term culture, and that’s what many people look for.”

Mr Lyttleton’s fund is not the only alternative UK retail strategy that charges performance fees. Most recently, New Star Asset Management introduced them for its £51.5m Heart of Africa fund for manager Jamie Allsopp.

However, Ed Moisson, director of fiduciary operations for Europe at Lipper, said the trend would be confined chiefly to alternatives.

“The fact that a small number of funds have a performance fee could encourage alternative funds to have a performance fee structure,” he said. “Will we have a torrent of funds with performance fees in place? No.”

Only 1 per cent of UK Oeics and unit trusts were seen to charge performance fees in Lipper's review of the topic towards the end of last year, while over half of all investment trusts already charged one.