Local view for "http://purl.org/linkedpolitics/eu/plenary/2013-07-02-Speech-2-664-000"
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"en.20130702.53.2-664-000"2
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"Mr President, I also want to thank our rapporteur, Sven Giegold, for his work on this very important report. It has just been said that these are phenomenally important UCITS funds; they have an enormous value. I want to focus then on the two issues which are important to investors and consumers across Europe, and that is the limit on performance fees paid by investors to management companies and a cap on bonuses for fund managers.
I think we should stick to the proposal as we voted with a majority in committee.
Investors already pay fixed fees to UCITS funds to invest, so performance fees are an additional fee on top and the performance fees are a percentage of the return or profit made on the fund. They are often high, they are not transparent and they vary significantly between funds, making it hard to compare and understand the impact on returns. Customer groups argue that performance fees are unfair to retail investors as they disproportionately reward fund managers who perform well in the short term, even if in the longer term they make a loss.
Let us have a practical example. In the UK Black Rock Absolute Alpha Fund paid its managers nearly 12.5 million in performance fees in 2010, even though it lost 3.86 % of investors’ money in the two years until 2011. This is in addition to the 1.5 % annual management fees that it takes regardless of the performance funds. That for me is a failure-to-perform fee which I do not think investors should have to pay. So I think these opaque fees reduce investors’ funds and income unfairly. It is a one-way street with benefits to providers and not to investors.
Just to briefly mention the cap on bonuses. As the rapporteur has said, I think that, together with the performance fees, the bonus culture has fuelled a culture of short-termism across the financial sector, where the focus is on short-term profits instead of long-term investment – and of course UCITS were created for long-term investment.
These rules will therefore ensure a level playing field across the financial sector, they will ensure that all remuneration in all financial sectors is better aligned with risk, and that is why I believe we should stick to the proposal voted with a majority in committee in tomorrow’s vote."@en1
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