Fees  

Orbis reduces performance fees to 40%

Orbis reduces performance fees to 40%
(Chris Ratcliffe/Bloomberg)

Orbis Investments has reduced its fee by 10 percentage points across its UK fund range.

The group will drop its fees from 50 per cent of outperformance to 40 per cent from June 1.

Dan Brocklebank, head of the UK business at Orbis Investments, said since the start of the year markets appear to be returning to a more valuation-driven mindset.

“As fundamental, long-term contrarian investors we are excited about our potential to deliver value for our clients in the current environment,” he said.  

“We are taking this opportunity to adjust our innovative fee structure so that it is more favourable to clients.”

He said rather than sharing outperformance 50/50, clients will retain 60 per cent of future outperformance generated.

“To put the 40 per cent in context, we must deliver top quartile performance to receive average fees, and if we perform only in-line with the market, we will be cheaper than a tracker fund,” he said.

“We think this is a much fairer approach than most of the industry which typically charges a fee of around 1 per cent of assets under management (AUM), whether performance is good, bad or indifferent.”

This can incentivise firms to focus on growth in AUM above all else, he said. 

“By comparison, our fee structure creates a unique alignment of interest between us and our clients.  

“With this fee structure, clients know that we can only do well as a business if we deliver, and sustain, value on their behalf.”

The 40 per cent outperformance fee is paid to a fee reserve, and these are refunded if the fund subsequently underperforms its benchmark.

Orbis receives a fee from the reserve equivalent to a third of the reserve annually, and this is capped at 2.5 per cent.

sally.hickey@ft.com