The trust will no longer make any contributions towards research costs and will pay less in marketing costs
The board of the Polar Capital Technology Trust has proposed a number of changes to the management fee to reflect the growing assets and strong performance of the vehicle, as well as the impact of MiFID II on the rules around research costs.
Under the new arrangement, the trust will no longer make any contributions towards research costs and will pay less in marketing costs, while it will also introduce a new lower fee tier and will amend the performance fee.
Currently, the trust has a tiered management fee, with a base fee of 1% of NAV up to £800m, reduced to 0.85% on assets between £800m to £1.7bn. On 1 January 2018, a temporary lower fee of 0.80% on assets over this threshold was introduced.
The board has agreed to make the third-tier fee permanent on assets above £1.6bn, while it also plans to introduce a fourth tier charged at 0.70% on NAV above £2bn. The trust currently has a NAV of around £1.8bn.
At the same time, the board is proposing to increase the incentive for the manager to beat the index during difficult market conditions by making the performance fee payable even in a year when the NAV has fallen, if the manager has outperformed its Dow Jones World Technology benchmark.
The board believes this would “potentially reward the manager for reducing risk”; however, the performance fee will be reduced from 15% of outperformance to 10%.
The cap on the amount of the performance fee that can be paid out in any one year, or upon the termination of the investment manager agreement without cause, is also being reduced from