Fidelity International has introduced a new variable management fee for five of its Luxembourg-domiciled equity funds.
The funds typically have an annual management fee of 70 basis points, as well as a variable that is dependent on how the fund develops relative to its predetermined market index over an annualised rolling three-year period.
The variable operates within a range of 20 basis points above and below the annual management fee. This means that, depending on fund performance, the management fee can range from 50 to 90 basis points.
Paras Anand, head of pan-European equities, said: 'We have followed and responded to the intense debate on the value of active fund management.
'Unlike other performance-based fee models, we reduce our fees in times of relative underperformance. We hope this creates an incentive for clients to stay invested in active strategies over the long term.'