The manager of BH Global, the investment trust Questor tipped last year, has handed the board an extraordinary ultimatum, threatening to quit unless its fees are doubled.
Should Brevan Howard succeed in its demand, the trust’s management fee would jump from 1pc to 2pc. That’s on top of an existing performance fee entitling the hedge fund manager to 20pc of any rise in the trust’s net asset value.
OK, if you can get it why not charge it. But the reason given:
So what makes Brevan Howard think it can buck this trend? As the fund manager puts it in its letter to the board, “exceptional performance”.
The fund group is attempting to renegotiate its fees after a renaissance in its investment returns.
Ah, no, if you’ve just made 27% for the investors then you’ve just been paid 20% of 27%, haven;t you? So your performance is rewarded. So that’s not a justification for a doubling of your flat fee of assets, is it?
The cynical would think as follows. Hedge fund performance reverts to the mean, a good year is often enough followed by a bad. So, use the good year to double the fees you’ll receive even in a bad one.
Well, if you can manage it then good luck to you but there’s no particular reason why people should believe your reasoning.