Does the NZ Funds Global Bonds charge a performance fee?
Yes — in addition to its annual fund charge.
Performance fee paid last period
0.03%
of NAV
Annual fund charge (on top)
1.44%
p.a. — the base ongoing cost
Verbatim from the Product Disclosure Statement
10% of the wholesale trust's returns above the hurdle rate. Hurdle rate: Bloomberg Global Aggregate Corporate - 1-3 Years Total Return Index Hedged USD. Performance fee accrued daily, payable on or after 31 March each year subject to high-water mark being exceeded.
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).