Dunedin Smaller Companies is to introduce a performance fee to be capped at 0.5%pa. This will be in...
Dunedin Smaller Companies is to introduce a performance fee to be capped at 0.5%pa.
This will be in addition to the trust's existing annual management fee of 0.4%. The portfolio is benchmarked against the FTSE Small Cap ex IC and the managers will have the fee calculated at a rate of 0.1% for each 1% NAV outperformance of this index.
In addition to the decision to add a performance fee to the trust, the notice period on the management contract with Edinburgh was reduced from two years to one.
A spokesman for Edinburgh Fund Managers, which has the management contract for the trust, said: "The introduction of a performance fee might be considered recognition of the fact that our management fee is one of the lowest in the sector, despite our good performance."
"It has a two benefits. Firstly, it brings our rewards into line with the efforts we make and the results we produce. Secondly, if we don't perform particularly well, we receive only our standard management fee, which remains one of the lowest in the sector.
"The reduction of our notice period took place essentially to align our contract with those of the rest of the smaller companies sector."
The Dunedin Smaller Companies trust is managed with a low risk approach and aims for a balanced exposure spread across the sector.
A spokesman for Edinburgh said: "We saw some benefits from the technology boom, having major holdings in media and technology, but overall the year to date has seen stock selection at a paramount, the economic environment has been very challenging and deflationary pressures have been mounting."
"The next six months will need careful decision making regarding stock but a bottom up approach should see us do well."
The trust was trading at a discount to NAV of 17.7% as of 5 October and has seen its NAV rise by 40.2% over the last 12 months.
Its largest holdings are Azlan Group, Incepta Group and Microgen making up a total of 6.7% of the portfolio.
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