The company is instead bringing a charging structure more associated with institutional hedge funds to the retail market: a hurdle fee structure will be applied that links any fees to the actual performance of the fund on an annual rolling basis.
Retail units will, however, implement an additional 0.5 per cent trail commission, which is paid to financial advisers. Way said that in practice investors would pay an effective 1 per cent management charge for 20 per cent gross performance under the tiered performance fee structure.
Proposed fee bands and resulting fee levels
| Band | Performance fee |
| <10% | 0% |
| 10-20% | 10% |
| 20-30% | 15% |
| >30% | 25% |
Source: Way Fund Managers
Eddie O'Gorman, director at Way, said the performance fee structure will ultimately be fairer on investors and keep the company's expanding retail funds range in line with its historical ethos as a wealth manager focused on IHT trust solutions.
O'Gorman adds that it is not certain that other funds will follow the same fee structure as this fund. Partly this is because it may not suit other types of products. But, it is also driven by realisation that events of late 2008 into 2009 saw business models severely tested for those providers in the institutional hedge fund universe that were totally reliant on hurdle rates; when losses mounted there was no cashflow from ongoing AMCs or other fees that these businesses could fall back on.
In particular the zero fee structure is not certain to be applied to the other two funds Way is launching into the retail market through August. These are the Way Absolute Return and Way Asian Spice funds.
The Freestyle Growth fund is likely to be rated in the IMA Specialist sector because of its portfolio intentions. Lead manager Trevor Chanter is allowed by the mandate to invest across any asset class, geographical sectors, and themes that he thinks will drive growth. The resulting mix of assets could include everything from gold mining companies, to currency baskets, to listed hedge funds, and on into agriculture and forestry.
Chanter will be assisted by a Star Chamber of known investors. Way has implemented the Chamber as part of its drive to broaden its suite of retail funds and tap into specialist expertise in areas such as fixed income, absolute return, and Asian equities.
Members of the Chamber include Peter Askew, formerly of JPMorgan Fleming, Jason Britton, chief investment officer of T. Bailey, Peter Chesterfield, founder and chairman of Wessex AM, Roderick Collins, founder and partner of Hasley IM, John Husselbee, chief investment officer of North Investment Partners, Ian Williams, chief investment officer of Charteris Treasury Portfolio Managers, and Paul Wilcox, chairman of Way Group and chairman of the Chamber. Trevor Chanter is also a member of the Chamber.
It should be noted that both Jason Britton and John Husselbee have stepped back from Chamber discussions on the Freestyle Growth fund because of perceived conflicts of interest. The Chamber is intended to tap into discussion unhindered by published minutes or quotes from its meetings.