Chrysalis board reviews fees on trust after managers pocket £60m

Chrysalis board reviews fees on trust after managers pocket £60m
Richard Watts, co-manager of the Chrysalis investment trust

The board of the £1bn Chrysalis investment trust has confirmed it is reviewing the fund's performance fee structure after the two managers were paid a £60m performance bonus for the year to September 2021.

Richard Watts and Nick Williamson will receive the £60m performance fee after hitting annual performance targets for the year to the end of September 2021.

They are both employees of Jupiter, and the firm itself will receive an amount of just over £50m in cash as its performance fee for managing the trust.

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The trust has returned more than 80 per cent over the past three years, and comfortably outperformed relative to its sector.

Yet, data from FE Analytics shows, its fortunes turned in recent months - it has lost 3 per cent over the year to January 27, and 25 per cent over the past six months.

The board of the trust previously disclosed that Jupiter had agreed to accept 54 per cent of the fees owed in the form of shares of the trust, a figure of around £60m. The managers' bonus is being paid entirely in shares from this month, in increments over the next three years.

But the company has now confirmed to FTAdviser that a review of the fees is taking place. 

A representative of Jupiter said: “The performance fee, as in any year, is reflective of the significant value that has been created for shareholders by the investment management team over the course of the year.

"The calculation for the fee is consistent year-on-year, and fully set out in the company’s prospectus. Jupiter, alongside the board of the trust, is committed to ensuring continued alignment with the company’s shareholders, and keeps all fee arrangements under constant review.”

They added: "The investment team is pleased to be taking this step [of accepting their bonus in shares] with a view to ensuring ongoing alignment with the best interests of the company’s shareholders.

"The decision to take these shares at the closing share price of 267p as at 30 September 2021, a level considerably above today’s share price, is a sign of the investment team’s long-term commitment to the trust and confidence in the strength and long-term prospects of the portfolio’s holdings.”

Jupiter took over the management contract for Chrysalis when it acquired Merian Global Investors in February 2020. Watts and Williamson were both Merian employees, with the former also becoming a shareholder in Merian when senior executives at the company led a management buyout from Old Mutual in 2013. 

Both Watts and Williamson also run open-ended funds at the company. 

Chrysalis invests in early stage, mostly unquoted, companies, and was launched to allow the fund managers to invest in unquoted equities - their specialism prior to the trust’s launch was investing in quoted small caps. 

The type of early stage and unquoted assets in which the trust invests have fallen sharply out of favour with investors over recent months however, as they fear the impact of higher interest rates on growth stocks.