The Woodford effect: IT boards under fresh pressure to review charges

The Woodford effect

Neil Woodford's decision to charge a performance fee but no AMC on his new Patient Capital trust has left analysts asking whether the move will accelerate price pressures in the closed-ended space.

Woodford has set a performance fee of 15% on any excess returns above his Patient Capital trust's 10% annual return target. The board of the trust has also reassured investors its performance fee will have a "high watermark", to prevent management claiming fees on returns that are simply making up losses from previous years. Ongoing annual expenses are not expected to exceed 0.35%. However, the decision to charge a performance fee runs counter to moves by many in the sector to scrap this method of charging in the last few years. A total of 27 investment trusts have removed performance...