By Nick Stride
Friday 24th September 2004 |
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In its latest newsletter Infratil, the investment company Morrison's Morrison & Co manages, has printed a four-page management fee analysis by Ernst & Young corporate finance.
It shows Infratil has paid $29.4 million in management fees over its 10-year life.
Ernst & Young then surveyed six other actively managed funds in comparable sectors.
It found they paid a fee of not less than 1%.
Ernst & Young then calculated what Infratil would have paid over 10 years had it been charged 1% or 1.5%.
Without performance fees the bill would have been $32.5 million or $48.8 million.
With performance fees, it would have been $74.1 million or $90.4 million.
The amount Infratil pays in fees has risen sharply over the years, to $5.6 million last year.
But so has the company's value from a market capitalisation of just over $100 million in 1996 to $685 million at recent prices.
The fee has averaged 0.95% of the company's value.
The lowest fee among the comparable companies was AMP NZ Office Trust (0.9% to 1.65% a year and no performance fee) and the highest was JB Were Private Equity Fund (2.5% a year and 20% of returns above 8.2% a year).
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