KiwiSaver manager lifts bonus target - Stuff.co.nz
If a fund was going to charge for performance a more reasonable benchmark for a share-heavy fund would be a combination of share indices in countries in which the money is invested (for example the NZX50 and/or MSCI World index) plus an added... Most funds that charge performance fees share only the upside, although managers such as Fisher make their bonuses subject to a high water mark - so when a fund drops they are not rewarded for getting investors back to where they started. From July Fisher Funds will raise the bar so its growth fund must beat the Official Cash Rate plus five per cent before taking a performance bonus, a much tougher test than its current benchmark of beating the 90-day bank bill index. Critics have argued that performance fees make funds too expensive, eating into returns and giving fund managers too much incentive to take risks with people's money. Fund manager Fisher Funds will have to work harder to earn big fees from its KiwiSaver members following consultation with the FMA. ''Low cost funds beat high-cost funds. But fund managing director Carmel Fisher said it was appropriate to reward managers in very good years. A Morningstar survey found the $500 million manager's growth fund was roughly twice the cost of its peers for the year ended March 2011, however Fisher said it was now nearer the middle of the pack except in very good years. Managers will take 10 per cent of any added returns up to a cap of two per cent of the fund, an arrangement Fisher is confident will meet final FMA fee guidelines due out in coming weeks. ''Your premise (as a fund manager) is (you) can pick shares which are beneficial to own and avoid those shares which are not beneficial to own. Fisher said sharing the downside would not work for KiwiSaver because fund managers needed certainty of income to cover their costs.