BlackRock has responded to the wider market shift towards performance-related pay by changing the calculation method for a number of funds within its Strategic Funds range, Wealth Manager sister site Citywire Selector has learned.
In a letter to shareholders, the BlackRock Strategic Funds (BFS) directors announced plans to introduce a money-weighted component to the calculation to reflect performance.
The change in calculation, which is set to come into effect on 1 June, will affect 13 funds which are deemed to be Type A within the BSF range. These are funds where performance is measured net of an interest rate.
These include the $1.2 billion BSF Americas Diversified Equity Absolute Return fund, which is run by Travis Cooke and Raffaele Savi, as well as veteran investor Andrew Swan’s BSF Asia Pacific Absolute Return fund. The change also affects emerging market outperformer Sam Vecht’s BSF Emerging Markets Absolute Return fund.
Essentially, BlackRock said, the change will mean that the performance fee for these funds will remain proportional to the size of the fund. It will reflect the difference between the reference NAV and the current day NAV (net of fees).
A spokesperson for BlackRock said: ‘As part of a comprehensive review and to reflect developments in industry practice, BlackRock is changing the performance fee calculation methodology for certain funds within the BlackRock Strategic Funds range.
‘The change introduces a money-weighted component, which better adjusts for flows in and out of the fund using a clear set of protection mechanisms for shareholders, regardless of the point at which they invest in the share class during the performance period.’
The move by BlackRock follows several similar shifts by asset management firms. introduced its ‘fulcrum’ pricing model in 2017, which was followed by in early 2018. According to market research group Flowspring, the concept of being paid to invest is now .
The funds in full
- BSF Americas Diversified Equity Absolute Return fund
- BSF Asia Pacific Absolute Return fund
- BSF Asia Pacific Diversified Equity Absolute Return fund
- BSF Emerging Markets Absolute Return fund
- BSF European Absolute Return fund
- BSF European Diversified Equity Absolute Return fund
- BSF Global Equity Absolute Return fund
- BSF Global Event Driven fund
- BSF Macro Opportunities fund
- BSF UK Emerging Companies Absolute Return fund
- BSF UK Equity Absolute Return fund
- BSF Style Advantage fund (Performance fee share classes only)
- BSF Style Advantage Screened fund (Performance fee share classes only)