Does the Lighthouse Global Equity Fund charge a performance fee?
Yes — in addition to its annual fund charge.
Performance fee paid last period
0.00%
of NAV
Annual fund charge (on top)
1.03%
p.a. — the base ongoing cost
Verbatim from the Product Disclosure Statement
30% of the Fund's performance, after the Fixed Fund Charges and any GST, but before the performance fee and tax, that is above the Hurdle Rate of Return (the return of the MSCI All Country World Net Index, measured in New Zealand dollars, plus 2% p.a.), subject to a perpetual High Water Mark.
How to read a performance fee
A performance fee is paid only when the fund's return exceeds a hurdle benchmark — often the OCR plus a margin, or a market index. The fee is usually a percentage share of returns above the hurdle (commonly in the low double-digits) and is subject to a "high-water mark" so the same gain can't be charged twice. Many NZ MIS funds also impose a hard cap as a percentage of NAV so the perf fee can't run unbounded in a high-return year.
Performance fees vary year-to-year — a fund can show a high perf-fee number one period and zero the next, depending on whether it cleared its hurdle. The structural questions worth answering before investing are: What's the hurdle? (cash-rate hurdles are easier to clear than index hurdles) Is the high-water mark perpetual or annual? (perpetual = stronger investor protection) and Is there a cap? (cap = downside-bounded fee).