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New Zealand

Devon changes performance fees, targets for three funds

Greg Smith: Head of Retail, Devon

Devon Funds Management has revamped performance fees and benchmarks for its three main products and lowered absolute return targets for two strategies in favor of index hurdle rates.

With this change, which took effect in September, the Devon Australian and Trans-Tasman funds will now target their respective performance fee benchmarks of the S&P ASX200 and the Australian/New Zealand mixed market index instead of their previous annual return targets of 10% and 9.85. adopted. percent.

Devon’s head of retail Greg Smith said the fee and benchmark updates “better reflect the style of these funds” and follow an “extensive review” of the manager’s product suite. .

“The performance fee model will continue to be subject to the high water mark, so clients won’t pay twice for the same performance and won’t charge a performance fee for negative returns,” said Smith. says.

“We also took the opportunity to impose a 3% performance fee cap on the Devon Alpha Fund. It is a high volatility fund and has also enjoyed strong inflows over the same period.”

The Devon Alpha Fund benchmark has also changed to the Official Cash Rate (OCR) plus 5%. Previously, the alpha strategy used simple OCR as a performance target.

Managers review the Product Disclosure Statement (PDS) each year and make “changes as needed,” Smith said.

“This year, we changed the ESG language of the PDS to better reflect our capabilities in this area and what we are doing with particular reference to the Devon Sustainability Fund.” He said. “We also highlighted our membership in the Principles for Responsible Investment (PRI), endorsed by the Australian Responsible Investment Association and the United Nations, and what this means.”

The Financial Markets Authority has recently targeted performance fees, investment benchmarks and ESG claims as part of its value for money and anti-greenwashing campaigns.

https://investmentnews.co.nz/investment-news/devon-changes-performance-fees-targets-for-three-funds/ Devon changes performance fees, targets for three funds

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