The board of Harry Nimmo's £163m Standard Life UK Smaller Companies trust has axed its performance fee, in a move to offer a transparent charging structure ahead of the impending Retail Distribution Review (RDR).
The company has dropped Nimmo's performance charge and will now just operate with a standard annual fee, although this has been increased from 0.65% to 0.85%.
The performance charge was earned if Nimmo outperformed his becnhmark +1% over any year. The trust was paid 20% of the outperformance of the index, although this was capped at a maximum of 0.6% per annum.
"The board recognises the importance of the company having a clear and easily understood fee basis to ensure that it remains competitive and fair to shareholders in the post RDR environment," said the board.
"With this in mind, the board and the manager have agreed to simplify the management fee structure by removing the performance fee element and reverting to a basic management fee arrangement."
This is lower than the old fee structure in which Nimmo was able to earn up to 1.25% of total assets, if performance targets were achieved.
The performance charge compares favourably to his SLI UK Smaller Companies open-ended fund, which has a 1.69% TER.
The fund was soft-closed last August when assets swelled to £1.3bn in order to allow Nimmo to maintain his flexible investment style.
However, as Investment Week revealed in June the fund can now be accessed on SLI's wrap, following a wave of redemptions since the soft closure.
No plans have yet been made to offer the vehicle widely across the other mainstream platforms or fund supermarkets.
Nimmo (pictured), one of the top performing small cap managers in the industry, has delivered a 91.3% NAV return over the past three years to investors in the trust, ahead of the HG Smaller Cos ex ICs index return of 46.1%, according to Winterflood.
His unit trust has returned 74.6% over three years, beating the 54.2% IMA UK Smaller Companies sector average, according to Morningstar.
Avoids paperwork with two-step process
Investment process will use machines
Mark Sterling accused of operating a collective investment scheme without authorisation
'Increasing engagement will only favour those prepared to put in the effort'