Performance fees boost managers' earnings
Performance fees have helped to lift the fee revenue claimed by fund managers Milford and Fisher Funds.
Wednesday, August 2nd 2017, 5:59AM 
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Companies Office figures show Milford reported fee revenue of $46.5 million for the year to March.
That is up 21% on the previous year.
Of that, $35.1m was management fees and $11.4m performance fees.
Milford has near $4 billion in retail funds, with more than $800m in its KiwiSaver funds.
For the same period, Fisher had fee revenue of $69.1m, up 3%.
That was made up of $60.8m in management fees and $3.3m in performance fees, which was a drop compared to the year before.
Carmel and Hugh Fisher, founders of Fisher Funds, were named on this year's NBR Rich List, with wealth of $55 million.
Fisher Funds is now the country's fifth-largest fund manager, with more than 255,000 clients and $7 billion under management.
Fisher stepped down from her role as managing director last year.
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r = D + G
r = zero plus 0.85 x 6 = 5.1% (assumptions are dividends totally consumed by operating costs and dividend growth of 6.0% pa versus 4.0% pa for large cap equities).
Doing the same numbers for a Vanguard index fund investing in large cap stocks gives you a return of about 7.3%. Comparing the two, the Pie Funds option gives you the risk of small cap with a return less than large cap. Hardly compelling is it, yet there is $120 odd million in that fund.