Global Corospondent- October 2017

Corospondent - October 2017

Download PDF

Fees Slashed On Some Of Our Strategies - October 2017

Back to contents
Kirshni Totaram

Kirshni Totaram

Kirshni is Global Head of Institutional Business. She joined Coronation in 2000.

As part of Coronation’s ongoing commitment to ensure the best outcome for clients, we continually review the charges on our products to make sure they reflect market conditions and offer compelling value to clients.

We are an active management house that aims to materially grow our clients’ portfolios by outperforming the market on a consistent basis over the long term. This is evidenced by Coronation’s almost 25-year track record of persistently outperforming the market. In fact, retirement funds which have been invested in Coronation’s flagship balanced strategy since our inception in 1993 (and there are many clients who fit this grouping) have grown in value by 3 791%, more than 1.65 times the return from a market-index portfolio.

It is in this light that we have made some bold changes to the fees in many of our top-performing strategies, which we believe will benefit our clients and safeguard compelling returns for years to come. We have cut fees by up to 15 basis points on many actively managed equity and multiasset class strategies. This includes our successful Global Emerging Markets Equity strategy, which has delivered outstanding returns since inception. All current clients have benefited from this move.

In addition, base fees on our performance fee options have reduced in line with fees on available passive solutions. We believe that this is a powerful move that offers investors only upside in terms of the costs they pay for our products and have an outsized benefit if we deliver outperformance over the market. We only earn higher fees if and when we outperform.

PIONEERING A CHANGE TO HEDGE FUND FEES

Coronation has taken a bold step in changing the fees on our hedge funds – making us a global pioneer with this move.

Coronation has always been outside of the norm by charging a performance fee only above the risk-free cash rate (many hedge funds charge fees over zero).

Along with a reduction in the performance fee participation rate, we have taken the bold step of capping the annual performance fee on our hedge fund portfolios from 1 October 2017. This is a pioneering approach in an industry that has traditionally never put caps on fees. We have introduced an annual performance fee cap for the Coronation Presidio Long-Short Equity Hedge, Coronation Multi-Strategy Arbitrage Hedge and Coronation Granite Hedge strategies.

As you know, Coronation is an owner-managed and investment-led firm. Every decision we make is driven by the sincere desire to deliver strong investment outcomes for our clients. We have demonstrated this client centricity over the years, time and time again. The latest fee reductions should confirm this commitment. For a more detailed breakdown of the fee changes, please contact your client service fund manager.