The board of the £169m Invesco UK Smaller Companies investment trust has abolished its performance fee but increased the annual management charge, following a year in which the trust underperformed.
The net asset value of the trust fell by 7.8 per cent in the year to the end of January 2019, compared with a fall of 7.4 per cent for the index.
The trust is still among the top 25 per cent of performers in the AIC UK Smaller Companies index over the past three and five years.
It emerged in Invesco's annual results yesterday (April 4), that as of February 1, the board of the trust had abolished the performance fee and instead increased the annual management charge to 0.75 per cent from the previous 0.65 per cent.
It stated that over the past five years the amount paid in performance fees had exceeded the amount paid in management fees, and so the board believes the change is in the best interests of shareholders.
The trust’s chairman, Ian Barby, said: "Shareholders will be pleased to know that, for the future, the board has agreed a simplified fee structure with the manager - comprising the removal of the performance fee (which over the last five years had exceeded, in aggregate, the total amount of the base fees paid) offset by a small increase in the base management fee from 0.65 per cent per annum to 0.75 per cent per annum of gross funds under management."
He added: "As part of these fee negotiations, the board has agreed to pay the manager all of the accrued but unpaid performance fees from previous periods, amounting to £785,000.
"This amount, together with the performance fee earned and payable for the year ended 31 January 2019 of £116,000, has already been taken into account in the calculation of the company’s net asset value, therefore there is no financial effect for shareholders.
"The board considers these changes to be a good outcome for the company, its shareholders and potential investors, who will have greater transparency of the costs associated with their investment."
david.thorpe@ft.com
