Trusts scrapping performance fees in larger numbers

Investment trusts are increasingly abolishing performance-related fees, with a total of 10 firms scrapping the additional charges in the past year and another trust announcing it will do so, the Association of Investment Companies has revealed.

According to the AIC, this year’s acceleration come on the back of last year when just three investment companies dropped their performance fees, and 2011 which saw the fees abolished by the same number.

Just over half of conventional investment companies (55 per cent) now have performance fees in place, AIC said.

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Data from the AIC also point to a strong year for investment company fundraising in 2013, with 14 new investment companies having launched on the main market and the Alternative Investment Market. These fourteen new issues have raised £2.6bn, up 200 per cent on the £882m raised in 2012.

The largest launch was Riverstone Energy, which launched in October and raised £760m, followed by CVC Credit Partners European Opportunities which raised £300m in June and Renewables Infrastructure Group which also raised £300m at its launch in July.

Data from JPMorgan Cazenove show that 2013 has been a record year for net flows in the industry too at £3.7bn for the 12 months to 30th November. While inflows, at £6.3bn, are below the 2007 record total of £8.8bn, outflows are down substantially on the £6.9bn seen in 2007 to £2.6bn this year.

Taking both new issues and secondary issues into account, £6.3bn has been raised over the year to 30th November compared to £3.4bn the previous year.