Your Industry  

EIS charges

This article is part of
Guide to Enterprise Investment Schemes

The charging structure of EIS funds can be “very complex”, according to Mr Kiernan, as the fund manager is required to undertake a lot of primary research in order to identify relevant opportunities.

Annual management charges range from 1 per cent to 2 per cent plus VAT of the value of the investment portfolio, while the manager will likely also take an initial charge of up to 5 per cent.

Of course, initial adviser charges of often 2 to 3 per cent and ongoing charges at a rate the intermediary sets will also apply, and can be facilitated by the manager from the client’s investment premium.

Article continues after advert

With funds, Mr Kiernan says there is also likely to be a performance fee charged by the fund/investment manager. He says this can be as high as 20 per cent of any profit made on the investment and will be taken when returns are paid to investors.

On top of this, Mr Kiernan says there may be arrangement 2 per cent, service, exit and monitoring 2 per cent fees chargeable to each of the underlying unquoted companies that the fund/manager invests in to.

Mr Kiernan says: “The charging structure with EIS is very complicated and investors should understand all of the costs involved before investing.”