65
MANAGEMENT CHARGES
BY INVESTMENT FOCUS
Analysing the charges by the investment
focus could provide some insight into
whether high growth focused opportunities
take higher charges in reward for more
active management and expertise, or
whether capital preservation and exit
focused opportunities take higher charges
in return for looking after investors’ capital
whilst providing a modest, lower-risk return.
The high initial fee for growth focused
investment opportunities is likely to be
down to the large amount of research and
due diligence required to find suitable
high growth investment opportunities.
The majority of investments are likely to
be early stage companies in specialist
sectors, and therefore information
is harder to access and assessment
requires more time and resources.
At the other end of the scale, exit focused
investments may be into slightly more
mature companies which are closer to
becoming profitable. They may have
been established for a longer period
of time and therefore less research
and due diligence is required to find
suitable investment opportunities.
The annual management charges are
much closer across the three sectors,
ranging on average from 1.78% for
capital preservation to 1.94% for exit. The
moderate AMC seen from growth focused
investment opportunities is likely to be
offset by the very high initial fees involved.
The following table provides a snapshot
of some of the different fees and charges
in the market. This includes examples
of some of the highest and lowest initial
fees, AMCs and performance fees.
KEY POINTS
Initial fees within the EIS market are
very high with an average of 4.3% of the
subscription amount
Initial fees and AMCs are due regardless
of the performance of the fund
20% performance fee on all profits is
the most common charged on EIS funds
Technology and Media have the highest
initial fees, due to the large amount of
research and due diligence required
CHARGES BY FOCUS
EXAMPLES OF HIGH AND LOW CHARGES
Sector
Name
Initial
Fee AMC Performance
Fee
Focus
Category
Technology Anglo Scientific EIS
Fund 2012
1.25% 1.50% Variable
Growth
Low Initial
Fee
Media
Film Fund One
6.50% 2.50% None Stated Growth
High Initial
Fee
Media
Prime Time EIS
Fund
3.50% 0.50% 25% Above
105p
Capital
Preservation
Low AMC
General
Enterprise
Jenson Growth EIS
Fund
5.50% 3.00% 25% of All
Profits
Growth
High AMC
Energy
Elara Renewables
EIS Fund II
6.50% 2.75% 10% Above
105p
Capital
Preservation
Low
Performance
Fee
Energy
Ingenious
Renewable Energy
EIS Fund
6.50% 1.50% 30% Above
105p
Capital
Preservation
High
Performance
Fee
“The high initial fee for growth focused investment opportunities is likely to
be due diligence required”
(2002-2014)
