Fisher Funds, aged 25, has a new business angle.
The Takapuna-headquartered manager will emerge with a much different profit-driver this financial year after shedding most of its contentious performance fees from July 1.
Last year Fisher earned more than $77 million in performance fees or almost 40 per cent of the group’s total revenue for the 12 months to March 31 last year.
While performance fees naturally fluctuate from year to year, Fisher – along with Milford Asset Management – has been one of the big winners from the benchmark-beating price system.
Under the changes unveiled last week, the Fisher KiwiSaver and multi-asset funds will remove the fee-enhancing performance criteria. However, performance fees will remain in situ for the single-asset Fisher funds.
And Fisher chief executive, Bruce McLachlan said the revised pricing deal comes with no strings attached such as a higher baseline fee.
“This is a genuine fee reduction,” he said.
Pie Funds, by contrast, raised the management fees for its suite of products after dropping the performance-related add-on charges several years ago.
The Financial Markets Authority (FMA) has targeted performance fees under its ‘value-for-money’ campaign but McLachlan said the Fisher decision was independent of any regulatory pressure.
“We did take part in the value-for-money pilot program [in 2021] and we have engaged with the FMA over fees,” he said. “But the fee change reflects the new profile of the business now with Kiwi Wealth – Fisher has nearly doubled in size and has a much wider audience.
“While Fisher clients have not been dissatisfied with our performance fees, the pricing structure could be a barrier to future growth.”
Fisher is now either second or third in the NZ retail funds pecking order after the Kiwi Wealth acquisition last year saw group assets under management jump from about $13.5 billion to more than $22 billion today.
Kiwi Wealth, notably the $6.3 billion KiwiSaver scheme, continues to operate as a stand-alone business as Fisher goes through the painful, and costly, integration program.
“It is a tough process,” McLachlan said. “We are doing it as quickly as possible but also with prudence and empathy.”
At some point, too, the Kiwi Wealth brand will disappear as underlying products also come into “alignment” with the Fisher counterparts.
“We have rights to use the Kiwi Wealth brand for two years but we are trying to make the change within one year,” he said.
Fisher formally took over Kiwi Wealth last December, cleaning out most of the senior executive and investment staff earlier this year.
However, full integration of the two fund shops is likely to take much longer than even the two-year deadline for keeping the Kiwi Wealth signage. Both managers use different fund administrators, custodians and supervisors, suggesting some complex decisions lie ahead – although Fisher has history in big back-office mergers after buying Tower Investments in 2012.
Celebrating a quarter century in business this year, the manager also embarked on a brand tweak to move “from a brand built around its founder [Carmel Fisher], to one encapsulated by the New Zealand Kōtare”.
The new stylised Fisher kōtare, or kingfisher, has shifted its body from the previous upright, backward-facing-on-a-perch position to “a modern reflection of forward momentum, growth, and progressiveness” precisely 53 degrees off the horizontal.