Management fees and other expenses

A - Minimum compliance

1.  Information should be provided on request with regard to:

  • The annual fees payable to the manager/trustee/other related parties, including the manager of indirect property investments.
  • The basis on which the annual fees are payable (whether percentage of capital or income and actual percentage).
  • Details of performance fee or carried interest, where applicable, including how the fees are calculated and paid, and any claw-back arrangements. Any fees which relate to but are not paid during the period should be estimated and accrued in accordance with applicable accounting standards.
  • Any other fees payable to the manager/trustee/other related parties.
  • Fee rebates (e.g. where one fund invests in another fund run by the same management company).


2. All funds should comply with the AREF Guidance on Expense Ratios (click here to view). This sets out recommended minimum disclosures for expense ratios based on NAV, and optional disclosures for ratios based on gross asset value (“GAV”) as follows:
 

Item % of NAV per annum Disclosure requirement
(A) Fund Management Fees   Minimum Compliance for NAV, optional for GAV
(B) Fund Operating Expenses   Minimum Compliance for NAV, optional for GAV
(C) Total Expense Ratio (TER) (A+B)   Minimum Compliance for NAV, optional for GAV
(D) Property Expense Ratio (PER) (excludes items in TER)   Minimum Compliance for NAV, optional for GAV
(E) Real Estate Expense Ratio (REER) (TER + PER)   Minimum Compliance for NAV, optional for GAV
(F) Transaction Costs   Minimum Compliance for NAV, optional for GAV
(G) Performance Fees   Minimum Compliance for NAV, optional for GAV


For further information members should refer to the AREF Guidance (click here to view).

3.  Funds are required to disclose a portfolio turnover ratio which indicates how much of the turnover in the portfolio has been driven by investment and withdrawals from the fund.

 

B - Best practice

1. Disclosures should include a statement of the fund's policy on which costs are borne from the fund and:

  • Paid from capital
  • Paid from income