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Volta cuts fees after good year

Volta cuts fees after good year – Volta Finance says that, during its financial year ended 31 July 2017, the net asset value per share (dividends re-invested) rose by 13.6%. The share price performance was even stronger, generating a total return of 18.7% as the discount to NAV narrowed.

The investment manager has agreed to amend their fee arrangements to simplify and tier the fee basis, commencing with the new financial year. The new performance fee basis of 20% of gains over an 8% net return in any financial year, paired with a high water mark. The basic fee changes mean that net assets in excess of €300 million are now subject to a fee of 1.0% per annum, down from 1.5% previously.

The manager’s report says that, for this annual period, two asset classes out-performed:

According to internal performance attribution estimates, the performance of Volta’s European CLO Debt was 24.9% and the performance of its USD CLO Debt was 29.8%, including the benefit and the cost of the borrowing applied to a portion of the USD CLO Debt (performance was 20.9% without taking into account the effects of this leverage). Both asset classes benefited from the credit tightening that occurred after the volatility experienced in Q1 2016.

CLO Equity tranches, both in USD and in euro, returned about 20% thanks to the same credit tightening but also to the positive effect of refinancing or resetting CLO debt tranches at lower spreads (mechanically it is beneficial to the equity which benefits from a lower cost of funding for the following years).

The lowest performing asset class for Volta this year was Cash Corporate Credit Equity (mainly direct lending through two private loan funds) with a positive performance of 9.3%, but they say that this portion of the portfolio and the Bank Balance Sheet portion are expected to provide very stable performances, which is exactly what they have previously delivered through the years, diversifying and stabilising Volta’s performance.

VTA : Volta cuts fees after good year

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