Woodford Investment Management will not receive a fee for managing this investment trust, unless we deliver a cumulative annual net asset value (NAV) return in excess of 10%. We believe this innovative fee structure is a first in our industry. It aligns fund manager and investor and reflects the conviction that we have in this uniquely attractive investment opportunity. The ongoing charges cover the general administrative costs associated with running the trust.
|Annual management fee||None|
|Performance fee||15% of any excess NAV returns over a 10% cumulative hurdle rate per annum, subject to a high watermark|
|Trust performance, net of all costs and charges (NAV)||7.91%|
|Breakdown of costs (% per annum of NAV)|
|Total cost of investing||0.20%|
Source: Woodford, with costs calculated against average trust size.
Performance data source: Morningstar Direct on a total return basis, with net income reinvested.
Past performance cannot be relied upon as a guide to future performance.
|01/01/12 to |
|01/01/13 to |
|01/01/14 to |
|01/01/15 to |
|01/01/16 to |
|Net asset value||-||-||-||-||-3.53|
|Ordinary share price||-||-||-||-||-9.90|
Performance fee calculation
Woodford Investment Management will receive a performance fee equal to 15% of any excess returns over a 10% hurdle rate per annum, subject to a high watermark. The performance fee will be calculated on the following basis:
PF is the performance fee
A is the adjusted NAV per share
B is the higher of
(i) the high watermark NAV per share
(ii) the hurdle
C is the time weighted average number of shares in issue
A−B is a negative number, it shall be taken to equal zero.
The performance fee will be paid in newly-issued shares save for an amount payable in cash to contribute towards associated tax liabilities1.
How the performance fee works
The video below illustrates how the performance fee mechanics work. For simplicity’s sake, we have assumed that no dividends have been paid, so capital return always equals total return.
Please note: This is not a guide to performance. All numbers are for illustrative purposes only.
80% of any performance fee will be satisfied by the issue of new shares with the remaining 20% paid in cash to contribute towards any tax liability of the manager by reason of payment of the performance fee.↩