Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Allianz GI unveils 'outperformance' fee on fund range

Allianz GI unveils 'outperformance' fee on fund range

Allianz Global Investors has introduced a new fee model, which is to be called the 'outperformance fee' share class.

On five active equity funds, the company will levy a 20bps fixed fee and a 20% outperformance fee for UK retail investors.  

On any day the fund outperforms its benchmark, the outperformance will be accrued as a fee. At the end of the year, if the overall performance has been positive, AllianzGI will be paid the total performance fee. 

The the new share class will be introduced on the following funds: Best Styles Global AC Equity, Emerging Markets Equity, Global AC Equity Insights, UK Mid cap and UK Opportunities

Andreas Utermann (pictured), CEO, said the move was due to the active management 'not responding' to the 'wave of passive' asset managers in the market. 

Utermann said: 'We realised three-four years ago that the problem with the active industry was that it had been stuck with a traditional pricing model and was not in tune with what clients wanted or needed.'

He revealed the firm had spent even longer,  five years, building up a capital buffer to be able to absorb the impact of the new pricing model.

He added: 'The launch of this new share class embodies the value shared approach at the heart of our business, with us sharing in the value created only when we deliver the sustained, superior outperformance we aim to generate as an active manager.'

The new model comes after months of discussions with the Financial Conduct Authority (FCA), which approved the new pricing model. 

Utermann revealed it 'took a long time' for the FCA to become supportive of its approach, with the regulator looking for clarity that all fees would be clear to retail investors.

Performance fees currently account for around 14% of Allianz GI's revenue.

The company said it will also consider the model on any new UK fund that it launches, and will look to roll out the model on some of its other funds where viable.

It comes after Allianz GI launched a 'fulcrum fee' model on three of its US funds last year, and told Wealth Manager at the time that it planned to launch a similar model in the UK.

It is currently in discussions with the Securities Exchange Commission (SEC) about rolling that out further. 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Your Business: Cover Star Club

Profile: how Tiller believes it's cracked robo-profitability

Profile: how Tiller believes it's cracked robo-profitability

Ian Cadby and Jonathan Wauton of Tiller Investments believe they have developed the next generation of digital wealth platform.

Wealth Manager on Twitter