Fees & charges

N.B. There are NO entry, exit or switching charges, no soft commissions, bid-offer spreads or other such hidden fees in any of Bedlam's charging structures.* (see note below). Full details of fee structures are in the Prospectus.

'A' shares and 'B' shares differ only in their charging structure.

B Shares

This fee structure was introduced in January 2005 following a change in FSA regulations, removing the bar on performance-related fees for collective schemes; a less complex (and arguably fairer) model than our original A share structure (see below) allowed at launch.

There is a low, base annual management charge of 1.25% (levied irrespective of performance) and then a performance fee (accrued daily and paid quarterly) of 20% of clients' absolute gains over two key hurdles. The first is the three-month money market sterling deposit rate (the Lloyds TSB rate is used) and the second, an ever-rising high watermark, which is the fund's respective all-time, quarter-end high NAV (adjusted for subsequent distributions). This is a key (and rare) attribute of the B shares, ensuring that performance fees are payable only after the NAV of the fund rises above its previous all-time, quarter-end high.

Annual Management Fee 1.25%
Performance Fee 20% of gain above cash/risk free rate**

(** subject to ever-rising high watermark principle)

A Shares

Our original "No Gain No Fee" structure. No fees are charged until after the fund has made an absolute return of 1.25% or more per calendar quarter. Fees are accrued daily and paid quarterly.  If we fail to beat this hurdle rate the accrued fee on shares held at the quarter-end is rebated to the fund. The management fee is capped at 1.25% per quarter (net of the minimum quarterly client gain of 1.25%) where the hurdle rate is surpassed. To illustrate:

Quarterly Return 0% to 1.25% Management Fee 0%
1.26% to 2.50% 0.01% rising to 1.25%

2.51%  or greater

1.25%

In the case of both structures, Bedlam remains crucially incentivised to make clients absolute returns. We are often asked which structure is 'better'. The impartial answer is that the A share structure is the better on 'straight line' returns of 5% p.a. or less, as no fee can ever be charged. On straight line returns between approximately 6% and 9% p.a., the A share is relatively poor value as much of the gain in that range is taken by way of fees to Bedlam. However, on returns higher than the mid-teens p.a., the A share structure then becomes cheaper (again on a straight line basis) than the B shares.

* N.B. An anti-dilution levy of up to 1% is payable (to the fund, not to Bedlam) in the event of redemptions in excess of 1% of a fund's NAV. This is to minimise any negative impact of large redemptions on existing fund-holders, in the absence of a bid-offer spread.

See also


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