Argonaut fund to introduce hurdle fee

The fund manager and Argonaut co-founder said that although the fund could grow past £100m in assets under management, it is important to incentivise managers in any capacity-constrained product.

He said: “Our ability to invest depends on stock selection. That said, we [will] not put a cap on the fund once it reaches £100m, but at some time in the future we [will] have to consider our options.”

The fund, which invests in European equities, currently has no performance fees and a clean share class of 75 basis points. When it hits £100m, it will charge 20 per cent for every 5 per cent, subject to an annual high-water mark.

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Mr Norris said: “Fees incentivise the manager to think about performance, not just growth in AUM. Fees are appropriate for any capacity-constrained fund in aligning the interests of the investors with those of the manager.”

The £50m fund, which celebrated its fifth anniversary in February, had £3m in AUM until September 2013.

Since then, it has moved to the Investment Management Absolute Return sector and gained more traction among retail investors who want a long-short strategy in Europe.

Adviser view

Juliet Schooling Latter, head of research for London-based Chelsea Financial Services, said: “Some absolute return funds are more diversified in strategy than the Argonaut Absolute Return Fund, which is a pure long-short European equity fund. At the moment, long-short funds have had a more favourable climate for this sort of strategy, as investing returns to more fundamental-driven strategies, and it is definitely a stock-picker’s market.”