Legal & General Investment Management has become the latest firm to scrap performance fees, after removing the charges from three of its multi-manager funds.
The change will mean the £200m Growth, £161m Income and £26m Balanced Multi Manager unit trusts will no longer charge the fees as of June 6. Overall fund fees will also fall by 15 basis points.
The vehicles had previously levied a fee of 20 per cent of any outperformance of the funds’ sectors, capped at 1 per cent of the portfolios’ value.
A spokesperson for the firm said: "We have elected to remove the performance fee for the multi manager range to simplify our charges. These decisions ensure that our pricing remains fair and consistent across our whole range of funds.”
"We have also decided to reduce the fund management fee on a small number of unit trust funds with legacy pricing."
The change forms part of a growing move away from performance fees as fund firms are pressured to reduce charges.
A report from Fitz Partners, released last week, found that the average performance fee across products in Europe had fallen from 20 to 16 per cent, though it noted that the way such charges were structured varied widely.
However, some fund firms continue to back the use of such fees. Polar Capital raised investors’ ire earlier this year by applying a 10 per cent performance levy to its UK Value Opportunities fund, managed by ex-Miton duo George Godber and Georgina Hamilton. The pair’s previous fund did not charge for outperformance.